Alexandra Semenova·ReporterJanuary 6, 2023, 6:46 AM·3 min readBillionaire investor Leon Cooperman doesn't think a bull market will come anytime soon and sees only a 5% chance of the S&P 500 rising above 4,400.
“What I said in the last program,” the chairman and founder of family office Omega Advisors told CNBC Wednesday evening, referring to a prior TV appearance, “is equities were the best house in the financial asset neighborhood, but I didn’t like the neighborhood — and I still don’t like the neighborhood."
The hedge funder, referring to Genesis 41, added: “I felt like a Pharaoh, the Pharaoh had a dream, the dream was interpreted by Joseph, and the dream was we’re going to have seven lean years following seven fat years. So I think anybody looking for a new bull market any time soon is looking the wrong way.”
This content is not available due to your privacy preferences.Update your settings here to see it.Cooperman, 79, attributed his view to financial markets coming off of a "speculative period" in recent years.
SPACS, cryptocurrencies, options trading, and “crazy valuations of the would-be FAANGs” – all of which have made a sharp reversal in 2022 after a boom the prior year – were the outcome of those “fat years,” according to Cooperman.
This pessimism comes after the worst year for stocks since the Global Financial Crisis in 2008. The S&P 500 tumbled 19.4% in 2022 and the Nasdaq Composite wiped out a third of its value. The Dow fell a comparably modest 9% but still rounded out the end of a three-year winning streak for the major averages.
Four trading days into 2023, the indexes are down on the year.
This content is not available due to your privacy preferences.Update your settings here to see it.“I think we’ve spent a lot of time pulling demand forward, and we gotta straighten that out,” he added, pointing to a super tight labor market that has 1.7 job openings for every worker looking, presenting a challenge for corporate profit margins.
Cooperman placed the chances of the S&P 500 staying in a range of 3,600 to 4,400 in 2023 at 50%, the likelihood of the index rising above 4,400 at 5%, and the possibility of levels falling into the low 3,000s range at 45%. The index closed at 3,808.10 on Thursday.
In Cooperman's view, the latter depends on whether the Federal Reserve attempts to achieve its long-term inflation target of 2% rather than settling at 3-4%.
The Consumer Price Index (CPI) rose at an annual clip of 7.1% in November, the latest reading before December’s report drops next week. The Personal Consumption Expenditure (PCE) Price Index rose 5.5% the same month.
Cooperman also emphasized that a lack of confidence in the system because of “foolish policies” is even more of a burden than inflation and the Federal Reserve.
“I would basically take the position that we are in a market of stocks rather than the stock market,” Cooperman said. “I expect very little over the next few years.”
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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