Billionaire hedge fund investor David Tepper claimed the US stock market is one of the most overpriced he has ever seen it, only behind the events of 1999. The comments prompted a stock sell-off, with many of the markets falling by close on Wednesday.
Mr Tepper, the founder of Appalossa Management, said the stock market is “maybe the second most overvalued” he has ever seen it, adding only 1999 was “more overvalued”.
He said some of the smaller companies listed on the Nasdaq, a stock market index, are “ridiculously” overvalued.
He credited the recent rise to aggressive monetary policy actions from the Federal Reserve, in response to the coronavirus pandemic.
The central bank pumped trillions of dollars into the US economy last week in order to cushion the economy fallout from the outbreak.
Mr Tepper told CNBC: “The market is pretty high and the Fed has put a lot of money in here.
“There’s been different misallocation of capital in the markets. “Certainly you are seeing pockets of that now in the stock market.
“The market is by anybody’s standard pretty full.”
His comments echoed data from FactSet, a US software company, which shows the stock market is the highest valued its been since April 2002.
But Mr Tepper’s comments prompted a drop in the markets, with the Dow Jones Industrial Average falling 2.17 percent.
The S&P 500 was also down 1.8 percent.
The hedge fund investor also commented on individual stocks, and called popular tech names such as Amazon “fully valued”.
The American company is up 27 percent his year as investors bet on its resilient business.
Commenting on the company, Mr Tepper said: “Just because Amazon is perfectly positioned doesn’t mean it’s not fully valued.
“Google or Facebook … they are advertising companies.
“They are not rich but they may be fully valued.”
Mr Tepper said the markets current overvaluation is only beaten by the 1999 tech-bubble, which was caused by excessive speculation in Internet related companies in the late 1990s.
Published at Wed, 13 May 2020 19:41:00 +0000