Omega's Cooperman: This Too Shall Pass

Jan 15 2016 | 9:04pm ET

Billionaire hedge fund manager Leon Cooperman of Omega Advisors recommends investors “hang tough” as markets grapple with fears of slowing growth and are off to their worst annual start in memory. 

In a Friday interview on CNBC, Cooperman believes the stock market may be near a bottom, and that a genuine bear market in which stocks are pervasively negative for an extended period of time is unlikely.

Cooperman’s relative optimism is one of the few positive voices among professional money managers at the moment. For instance, JP Morgan’s Jamie Dimon, BlackRock’s Larry Fink and DoubleLine’s Jeff Gundlach have all expressed concerns in recent days that the equity market slide could continue. 

Cooperman’s take is based on a number of factors. He doesn’t see signs of a U.S. recession, stocks do not appear overvalued at the moment, geopolitical events are volatile but nothing that risks a market wipeout, and global monetary policy remains extraordinarily accommodative despite the Fed’s minimal hike at the end of last year. 

In the interview, Cooperman noted that famed investor Sir John Templeton said “bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” There are certainly few signs of such euphoria now, he pointed out.  

Cooperman added that he believes the liquidity crunch in credit markets, particularly among high-yield issues, is exacerbating the situation as managers are hedging problematic positions via short positions in equity market indices such as the S&P. 

“This too shall pass,” predicted Cooperman in the interview. "What I would say…is I'm not selling," he said. "I'm holding on because I do believe it's a growth scare rather than a bear market."

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