Appaloosa Management LP’s David Tepper sounded a strong note of pessimism on the state of the stock market, calling it the most overvalued ever outside of the bubble of 1999.
Valuations on some individual stocks on the Nasdaq are “nuts,” Tepper told CNBC on Wednesday.
Tepper’s remarks echoed those of Stan Druckenmiller, who said yesterday that the risk-reward calculation for equities was the worst he’s seen in his career. Their views injected a note of pessimism in a market that has rallied almost 30% since its March low despite the fact that the coronavirus pandemic has pummeled the U.S. economy.
“The market is pretty high and the Fed’s put a lot of money in and it’s a question: Have there been different misallocations of capital?” Tepper said. The market “is by anybody’s standards pretty full,” he added.
Some of the smaller companies listed on the Nasdaq are “ridiculously” overvalued, he said. A major name that’s not is Amazon.com Inc., which is a “perfectly positioned company.”
Tepper’s Appaloosa had $13 billion at the end of the year, much of it the founder’s own money. Last year he said he was transitioning to a family office, though he planned to keep a few outside clients.
Last month, investor Carl Icahn said he wasn’t buying stocks and that he was hoarding cash, shorting commercial real estate and preparing for the coronavirus to wreak more havoc.
Among Tepper’s other comments:
- The stock market probably won’t retest its bottom. “That doesn’t mean you can’t fall,” he said.
- Moves by the Federal Reserve have helped the market rebound.
- His firm is 10% to 15% long in equities.
- The NFL’s Carolina Panthers, which Tepper owns, could play games this season with some fans in attendance. “You won’t be having full stadiums, but that doesn’t mean you can’t have some fans in the stadium either,” he said.
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