Leon Cooperman: S&P 3,100 Is a Signal to Sell

Billionaire investor Leon Cooperman, chairman and CEO of Omega Advisors, believes that the stock market is in a “zone of fair value” at present levels.

Nevertheless, he has recently taken to warning that a sharp move higher in stocks could alert investors to begin a “the close-out move,” meaning the end of what has been a long bull run for stocks. 

Cooperman considers a S&P 500 increase to 3,100 in the near future as “knocking on the door of euphoria.” If that happens, Cooperman said, he will be reducing his exposure in stocks.

The broad stock index recently topped 3,000 the first time, adding nearly 20% year to date.

For the moment, however, Cooperman has said that he’s “enjoying” the move upward in equities. Currently he is 75% invested in the market with the rest in fixed income.

Cooperman went on, questioning Wall Street’s desire to see an interest rate cut from the Fed, especially since the market is setting record highs.

The Fed meets next on July 30 and 31 is widely expected to cut rates for the first time in more than a decade.

Cooperman believes the Fed has been too relaxed, characterizing monetary policy as “inappropriate.” He believes that the fed funds overnight lending rate should be at 3%, not the current target of 2.25% to 2.50%.

Last hurrah

Others also believe the current bull run in stocks will come to an end soon.

“Growth appears to be moderating, borrowing costs have edged higher, trade disputes are a major source of risk and in the case of the U.S., the effect of tax incentives introduced by the Trump administration to incentivize the repatriation of cash held in overseas subsidiaries is starting to fade,” Jason Hollands, managing director at Tilney Investment Services, told Morningstar UK.

Morningstar, however, does suggest not running back into cash instantly.

“Research from RBC shows that investors lose out by, on average, 19% by missing the last six months of a bull market, 29% by missing the last year and 48% by missing the last two years,” noted the fund rating service.

Morningstar believes, as does Cooperman, that the market will have “a last hurrah” before a decline begins in earnest.

Exactly when that last hurrah will take place, however, is anyone’s guess. 

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