Billionaire investor Leon Cooperman told CNBC on Wednesday that he believes the stock market will struggle to generate significant returns in the coming years, following its robust recovery from the low points of the pandemic era in the past 10 months.
“I think the short-term outlook is probably OK. In the long run, I think we are borrowing from the future,” said Cooperman in the “Squawk Box”.
“Whenever you bought on the market when it was selling at the present multiple of, say, 22 times or more, you never made much money a year, three years, five years later. I think that’s what we’re looking at,” added the president from the Omega Family Office.
The Federal Reserve’s accommodative monetary policy, coupled with the aggressive fiscal stimulus provided by Congress, in response to the pandemic, is just “putting more fuel into the fire” on Wall Street, Cooperman said.
“There is a significant share of the market today that is euphoric. You see price movements of 50%. You see a SPAC per minute. This is something that is ringing the bell,” said Cooperman.
When researching the market, Cooperman said his approach is “to seek value”. He added: “I have long-term concerns because I think the policies we are implementing are unsustainable.”
“We have this momentum. We have the momentum of very simulative fiscal and monetary policies. It is difficult to fight against it today,” said Cooperman, just hours before President-elect Joe Biden, a Democrat, was sworn in.
“Then we will have the influence of a new government,” which is likely to pursue policies such as higher corporate taxes and more regulation, he said, adding that he believes these policies could harm the stock market. “It is a less favorable and less favorable business environment,” he predicted.
A frequent critic of progressive Democrats and outgoing President Donald Trump in the past, Cooperman said he voted for Biden in November, although he was “against my own economic interests”. Instead, he said he voted “my values, and my values did not lie to President Trump”.