Yesterday Leon Cooperman gave 14 reasons why we won’t experience another 2008 type decline.
Cooperman remains bullish even as his Omega Fund has lost over 10% this year.
See his full presentation and others from the Value Investing Conference at Marketfolly.
Why We are Not Likely to Experience Another 2008 Type Decline?
1. Banking system has gone from insolvency to strong capital ratios.
2. No weak/opaque shadow banking system to contend with.
3. The financial condition of Corporate America is excellent.
4. Profit and revenue growth are still good as is growth in dividends and share buybacks.
5. Business inventories are in excellent shape. There is no bubble in housing as in 2008 and
most cyclical sectors of the economy are at a very low percentage of GDP.
6. Household debt/GDP, while still high, has dropped from 95.4% to 85.1%. Debt service
ratio substantially improved.
7. The consumer savings rate has gone from 1% to 5.0%.
8. Lower dollar should be a plus for exports.
9. Oil price decline from $115 to $77 WTI ($130 to $102 Brent) per barrel positive for
consumers and economy generally.
10. FED policy of zero interest rates will ultimately work.
11. Tame wages and decent productivity.
12. Decent M&A activity and large pool of private equity capital.
13. Investors are conservatively postured.
14. Market valuation very appealing – both absolute and particularly relative to alternatives
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