Legendary hedge fund manager Leon Cooperman, founder of Omega Advisors, was frightened by Friday’s market plunge.
"I'm not selling. I'm holding on because I do believe this is a growth scare and not a bear market," the billionaire CEO of Omega Advisors told CNBC.
U.S. stocks tumbled Friday, with the Dow industrials plunging 500 points at one point as the price of crude oil dropped below $30 a barrel, pulling energy company shares sharply lower.
As of midday Friday, the Dow and S&P 500 have now fallen about 8 percent this year, while the Nasdaq is off 10.7 percent. A “bear market” is commonly defined as a decline of 20 percent from new highs.
While Cooperman noted that recent economic data show a "soft spot," he told CNBC that a bear market, marked by sustained selling, would look imminent with mounting signs of a recession. However, trends in job creation and unemployment don’t show a coming recession, he said.
"I'm of the view that the market is going down to be bought," Cooperman said.
He also contended that stocks haven’t reached a level of overvaluation that would lead to a bear market.
Still, Cooperman admitted that he has been "too optimistic" about the markets. But he cautioned that BlackRock CEO Larry Fink's outlook that stocks could fall another 10 percent from Friday's premarket levels may be too pessimistic.
Fink also said oil prices could test $25 per barrel.
"We're in the midst of a real market decline, bordering on a bear market," Fink
told CNBC. "But the speed at which this is happening is just a reassessment of the risk, reassessment of where we're going."
"I believe there's not enough blood in the street. We'll probably going to have to test the markets lower," Fink said. "When we test the markets lower, it's going to be a pretty good buying opportunity."
Fink doesn’t believe stocks will enter what he calls a classic bear market. "I always look at a bear market ... [as] persistent water torture, day after day after day after day. I'm not sure this is what we call a classic bear market.
But by the second half of the year, Fink said, the stock market should be higher. "Over the course of the next six months, we think it's going to feel a lot better."
"There's not that much leverage in the system," he said. "That's why all the analogies to 2008 and 2009 are erroneous. We don't have that type of leverage."
Discouraging data on retail sales and manufacturing also weighed on the market. The market slide was broad, with financial and technology stocks among the biggest decliners.
"Oil is the root cause of today," Dan Farley, regional investment strategist at the Private Client Reserve at U.S. Bank, told the AP.
"People are uncertain, and when they're uncertain they're scared."
(Newsmax wire services contributed to this report).
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