Jim Chanos, the billionaire investor who enjoys zigging when other stock market pros are zagging, sees plenty of ripe opportunities to go short now – just as the U.S. stock market has been chalking up a string of new highs.
In an interview with
CNBC, Chanos said equities look increasingly dicey at this stage in the bull market.
“We’re finding a meaningfully… larger [number] of opportunities on the short side at the end of 2013 than at any time since ’06 and ’07,” he said, referring to previous high-water marks in stocks.
Editor’s Note: 5 Reasons Stocks Will Collapse . . .
Chanos said he is short CGI Group, the parent of CGI Federal, the company that built the bungled HealthCare.gov website for Obamacare.
He also told CNBC he has an unfavorable view of heavy construction equipment icon Caterpillar, and would avoid industrial commodities like iron and coal.
"I think the risks have increased in the U.S. market rather dramatically in the past year," Chanos told CNBC. "Are we at some sort of top? I have no idea, but I do know that people that were eschewing risk in 2009 when they should have been taking it are now embracing it in late 2013."
Chanos also said he believes China is ensnared in a banking crisis, and said that nation’s reputation as "the source of unending demand could be questioned."
Another CNBC guest also offered a cautionary take on the bull market following last week’s Federal Reserve-induced jump in stock prices.
"I'm not entirely convinced this move is going to last," said Pedro de Noronha, managing partner at Noster Capital. "The natural reaction when yields go higher is also for stock markets to go lower."
Noster predicted bonds will be a good investment in 2014 only if there is a corresponding “massive correction” in stocks.
Economists generally believe that with the Fed starting to cut back on its massive asset purchases, the central bank’s support for rock-bottom interest rates is thereby lessened.
"Investors need to realize that almost 50 percent of the earnings growth in the S&P 500 from 2009 to date came from lower interest rates," Noronha told CNBC. "That tide has now shifted, and those tailwinds turned into headwinds, making 2014 a tougher year for the equity markets."
Reliable bull Bob Doll, chief equity strategist at Nuveen Asset Management, has a more optimistic take on the markets.
Doll said in his weekly market commentary that the global economic outlook “appears balanced and healthier” going into 2014.
“Downside risks to our outlook do not appear particularly high,” Doll said. He predicted U.S. GDP will grow by 3 percent in 2014. His view is that the economy is still in the early stages of a healthy business cycle.
Editor’s Note: 5 Reasons Stocks Will Collapse . . .
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