Markets might be volatile right now, but Omega Advisors CEO Leon Cooperman says it’s nothing to worry about.
He told FOX Business Network’s Maria Bartiromo, “I think if the market went say, quickly up another 10 percent or so I might get nervous but I think the markets in a zone of fair valuation. It’s correctly assessing the outlook…I’m not nervous.”
Cooperman said the market is “fully” valued, but not overvalued -- and he doesn’t see any “signs” of a weakening market.
“Bear markets don’t come about through ‘Immaculate Conception.’ It’s fundamental forces that result in the big decline,” he said.
Even if and when the Fed starts raising rates, Cooperman said he believes any hike is already priced in.
“We have a Fed that has been very reluctant to do much of anything, I find it interesting this fixation [on when the Fed will tighten], the reality is … over the last 8 market cycles when the Fed began tightening, the stock market did not peak after the first Fed tightening for 30 months on average, and the shortest period of time was 10 months. On average, the market was about 10 percent higher one year after the first Fed tightening … The market already understands rates should be higher,” he said.
Although stocks are “not a bargain anymore,” the $9 billion hedge fund founder still thinks equities are the best place to invest.
“I said this in 2011 … ‘in the world of financial assets, the best house in the neighborhood was equities’ -- and I would still feel that way now, but with a lesser degree of excitement and conviction. Whereas your financial advisors … their choice basically is to buy government bonds … corporate credits … they can keep their money basically in cash … or they can buy their favorite stock, 35% of the stocks in the S&P 500 yield more than bonds,” he said.
Despite “unattractive outlooks,” Cooperman sees the biggest potential for growth in the U.S. stock market in housing and health care.
“Prices define opportunity. Sometimes an area might [have] an unattractive outlook, but the underlying security is so cheap you want to buy it … stocks … would be the place to be,” said Cooperman.