Billionaire investor Leon Cooperman says long-term stock returns could be meager, and blames the Fed for ‘creating an environment of free money’

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  • Billionaire investor Leon Cooperman told CNBC on Friday that future stock returns could average “very little.”
  • He’s also concerned about long-term consequences of the Federal Reserve’s actions.
  • “The Fed is just creating this environment of free money. You have to kind of make a judgement whether that’s justified, how long it’s going to last and what impact this has on the longer-term outlook,” the Omega Advisors chairman said.
  • “Who pays for the party when the party is over?” Cooperman added.
  • Visit Business Insider’s homepage for more stories .

Billionaire investor Leon Cooperman told CNBC on Friday that long-term stock returns could be meager thanks to rising national debt and the Federal Reserve’s pumping of “free money” into the market.

“The Fed is just creating this environment of free money,” the chairman of Omega Advisors said. “You have to kind of make a judgement whether that’s justified, how long it’s going to last and what impact this has on the longer-term outlook.”

While he said the near-term view of the stock market is favourable because of the Fed’s policy, and a stimulus and vaccine on the horizon, he has a “dissenting view” longer term because he’s concerned about the $US20 trillion of national debt in the US. “Who pays for the party when the party is over?” Cooperman added.


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The investor also said that history demonstrates that the forward returns for an investor who buys into the market at its current level of valuation are “not particularly attractive.”

“I went back and I looked, whenever you bought into the S&P 500 and you sold at 22 times earnings or more, your five year return forward was near zero, so I would not be surprised if the market averages very little,” said Cooperman.

This isn’t the first time Cooperman’s expressed concern about the long term outlook for stocks. He told CNBC in August: “we’ve been pulling a lot of demand forward. I would expect the future returns will be relatively unimpressive for a long time.”

Cooperman also said in a RealVision interview in September, “I have a very conservative view about the market presently, because I’m worried about who pays for the party when the party is over.”