President Donald Trump urged investors to be wary of “rich guys” using their platform to comment negatively about stocks, when they tend to profit from betting against the market.
“When the so-called ‘rich guys’ speak negatively about the market, you must always remember that some are betting big against it, and make a lot of money if it goes down,” Trump tweeted. “Then they go positive, get big publicity, and make it going up. They get you both ways. Barely legal?”
While Trump didn’t specify whom he was referring to, his comments followed billionaire hedge fund manager Stanley Druckenmiller’s remarks about the stock market being historically overvalued, CNBC explained.
“The risk-reward for equity is maybe as bad as I’ve seen it in my career,” Druckemiller told the Economic Club of New York. “The wild card here is the Fed can always step up their (asset) purchases.”
Hours after Trump’s tweet, 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 Druckenmiller. 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, Bloomberg explained.
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.
Wall Street stocks fell in a second straight day of sharp losses, weighed down by worries about a slow recovery for the economy, the Associated Press said.
The market has been wavering the last couple weeks after coming off its best month in a generation, as optimism about reopening the economy collides with worries about the dangers of lifting restrictions too soon.
”At this stage now, we think there are more risks to the downside than the upside,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.
”Consumers in general are going to be more wary and more interested in boosting savings rates and are unlikely to come back to a world of consumption anywhere near what it looked like before,” she said.
Worries that the economic recovery may not be as strong or as rapid as investors had been banking on just a week ago hit oil companies and banks particularly hard.
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