For years, famed investor Leon Cooperman has talked up stocks. But on last night’s Kudlow Report, he sounded the alarm. Cooperman, who is a widely followed investor and chairman of the hedge fund Omega, has made headlines for quite some time calling stocks “the best house in the financial-asset neighborhood.” Back in 2011, Cooperman outlined his pro-stock market thesis at length on CNBC.
But last night, Cooperman made a surprising statement that presumably reflected a shift in his outlook. He told me, “I think the stock market presently is fairly valued. I believe the profit cycle is peaking.” Cooperman went on to say that the market multiple may be too high. After noting that the market multiple is around 15, he said the growth rate over the past 50 years or so has been much more robust. So if we’re moving into a period of slower growth, Cooperman reasons that the premium investors are willing to pay for stocks will probably decline. That’s not to say Cooperman is a seller — he’s not. “I’m not aggressively bullish or bearish,” he explained, “I’m simply saying I think the market is now fairly valued.”
And he reiterated something he’s said many times before: “If you must put money to work, I still don’t think there’s a better alternative than common stocks. The Fed has made all the alternatives very unappealing.”
Nonetheless, his commentary suggests his outlook is shifting. Cooperman also told me that he thought all the concerns about the fiscal cliff or the confluence of tax hikes and spending cuts that could go into effect as soon as January 1 are overblown. “They’ll kick the can down the road,” he said. “There’s no way a politician will allow the cliff to hit.”
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