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Yahoo
5 days ago
- Business
- Yahoo
Veteran fund manager sends urgent 9-word message on stocks
Veteran fund manager sends urgent 9-word message on stocks originally appeared on TheStreet. The stock market has had a rally for the ages since President Donald Trump backed off some tariffs in early April, clearing the way for trade negotiations with major trading partners. The S&P 500 marched over 25% higher since hitting a tariff-fueled low on April 8; however, cracks in the U.S. economy are forming even as President Trump's tariff pause has expired, unleashing a new wave of inflation-unfriendly import taxes. 💵💰💰💵 Weakening employment data and arguably sticky inflation isn't a great recipe for stock market gains, and it doesn't help that August is historically a tricky month for markets. The dynamic has increased investor anxiety, causing a sharp and fast 3% dip late last week. The potential for additional losses has Doug Kass's attention. Kass is a veteran hedge fund manager with 50 years of experience, including a stint as research director for Leon Cooperman's Omega Advisors. On August 5, he sent a blunt message to investors that's likely to turn some heads. Doug Kass sounds the alarm on stocks The stock market's gravity-defying gains have rewarded many investors who took advantage of stocks becoming deeply oversold this spring, including Kass. A self-described contrarian with a calculator, he correctly called the selloff overdone in early April before its big move he's less impressed, saying that the downside risk dwarfs the upside reward, particularly given what he sees as lackluster earnings outside of high-tech. "Non tech Q2 earnings were poor — as was forward guidance," wrote Kass on X. "The rate of growth in economy and corporate profits (ex AI) are rolling over. Market participants are worshipping at the altar of price momentum, speculating in meme stocks and riding the wave of large-cap tech equities." Just as Kass was bullish on stocks in April when everyone else was bearish, now he's turned bearish when everyone is seemingly bullish. According to Bank of America, "all major client groups bought equities last week, led by institutions," resulting in the first stock market inflows in six weeks. Fund manager buys and sells Veteran fund manager who forecast Nvidia stock rally reboots outlook Stocks & Markets Podcast: Small Caps & Your Portfolio With Thomas Browne Legendary fund manager reveals new trades after S&P 500 rally "Bull Markets Die Hard, so I don't anticipate a straight-down correction," wrote Kass in a pre-market post on TheStreet Pro on August 4. "Rather, I am expecting a jagged move lower in the weeks and months ahead. I will be reshorting strength. Friday was likely the first shot across the bow." Kass hits the sell button, shorts Nvidia, Palantir, Tesla And strength is what Kass got. After the 3% dip in the S&P 500 and Nasdaq caused by worrisome inflation and jobs data last week, the indexes rallied on August 4, adding 1.5% and 1.9%, bounce gave Kass the "reshorting" opportunity he mentioned. As a result, he delivered an urgent message, saying he is "back to my largest net short exposure since January." Kass is picking and choosing, and while net short, he still owns stocks, suggesting his shorting stocks is simply managing risk to control his downside if stocks do roll over. Among the stocks he's shorting are technology bellwethers he believes have run too fast, too far, and thus, might be due for a short-term retreat, including Nvidia, Palantir, and Tesla. "The investing world almost universally believes it has discovered a new god in artificial intelligence and machine learning," said Kass. "AI infrastructure CAPEX is already 20% higher as a % of GDP than what was spent on telecom and internet infrastructure at the peak of the dot com boom." Kass doesn't think that's sustainable, leading him to take "trading short rentals" on Nvidia () and Palantir. Nvidia, the AI-chip Goliath, is up 70% in the past 12 months, including 57% in the past three months. The company's shares have recently moved higher on optimism over rising capital expenditure budgets at major hyperscalers, including Microsoft and Meta Platforms. Meanwhile, Palantir's () shares have skyrocketed on optimism surrounding its AI software platform, gaining 128% in the past year, and 58% in the past three months, including a sharp post-earnings rally this week. He is also short Tesla, which has been mired in a sales slump since CEO Elon Musk supported President Trump's reelection bid and took a role in the administration earlier this year at the newly created Department of Government Efficiency. Musk has since stepped down from that role, but Tesla's sales haven't recovered yet. In Q2, Tesla's revenue fell 12% year over year to $22.5 billion. "Current valuations are a poor launching pad for future investment returns," said Kass. Todd Campbell is long Nvidia, Palantir, and Tesla fund manager sends urgent 9-word message on stocks first appeared on TheStreet on Aug 5, 2025 This story was originally reported by TheStreet on Aug 5, 2025, where it first appeared. Sign in to access your portfolio
Miami Herald
7 days ago
- Business
- Miami Herald
Veteran fund manager sends urgent 9-word message on stocks
The stock market has had a rally for the ages since President Donald Trump backed off some tariffs in early April, clearing the way for trade negotiations with major trading partners. The S&P 500 marched over 25% higher since hitting a tariff-fueled low on April 8; however, cracks in the U.S. economy are forming even as President Trump's tariff pause has expired, unleashing a new wave of inflation-unfriendly import taxes. Don't miss the move: Subscribe to TheStreet's free daily newsletter Weakening employment data and arguably sticky inflation isn't a great recipe for stock market gains, and it doesn't help that August is historically a tricky month for markets. The dynamic has increased investor anxiety, causing a sharp and fast 3% dip late last week. The potential for additional losses has Doug Kass's attention. Kass is a veteran hedge fund manager with 50 years of experience, including a stint as research director for Leon Cooperman's Omega Advisors. On August 5, he sent a blunt message to investors that's likely to turn some heads. The stock market's gravity-defying gains have rewarded many investors who took advantage of stocks becoming deeply oversold this spring, including Kass. A self-described contrarian with a calculator, he correctly called the selloff overdone in early April before its big move higher. Related: Major analyst sends blunt 3-word message to investors Nowadays, he's less impressed, saying that the downside risk dwarfs the upside reward, particularly given what he sees as lackluster earnings outside of high-tech. "Non tech Q2 earnings were poor - as was forward guidance," wrote Kass on X. "The rate of growth in economy and corporate profits (ex AI) are rolling over. Market participants are worshipping at the altar of price momentum, speculating in meme stocks and riding the wave of large-cap tech equities." Just as Kass was bullish on stocks in April when everyone else was bearish, now he's turned bearish when everyone is seemingly bullish. According to Bank of America, "all major client groups bought equities last week, led by institutions," resulting in the first stock market inflows in six weeks. Fund manager buys and sells Veteran fund manager who forecast Nvidia stock rally reboots outlookStocks & Markets Podcast: Small Caps & Your Portfolio With Thomas BrowneLegendary fund manager reveals new trades after S&P 500 rally "Bull Markets Die Hard, so I don't anticipate a straight-down correction," wrote Kass in a pre-market post on TheStreet Pro on August 4. "Rather, I am expecting a jagged move lower in the weeks and months ahead. I will be reshorting strength. Friday was likely the first shot across the bow." And strength is what Kass got. After the 3% dip in the S&P 500 and Nasdaq caused by worrisome inflation and jobs data last week, the indexes rallied on August 4, adding 1.5% and 1.9%, respectively. Related: Fed official sends warning on 'two-speed' economy The bounce gave Kass the "reshorting" opportunity he mentioned. As a result, he delivered an urgent message, saying he is "back to my largest net short exposure since January." Kass is picking and choosing, and while net short, he still owns stocks, suggesting his shorting stocks is simply managing risk to control his downside if stocks do roll over. Among the stocks he's shorting are technology bellwethers he believes have run too fast, too far, and thus, might be due for a short-term retreat, including Nvidia, Palantir, and Tesla. "The investing world almost universally believes it has discovered a new god in artificial intelligence and machine learning," said Kass. "AI infrastructure CAPEX is already 20% higher as a % of GDP than what was spent on telecom and internet infrastructure at the peak of the dot com boom." Kass doesn't think that's sustainable, leading him to take "trading short rentals" on Nvidia (NVDA) and Palantir. Nvidia, the AI-chip Goliath, is up 70% in the past 12 months, including 57% in the past three months. The company's shares have recently moved higher on optimism over rising capital expenditure budgets at major hyperscalers, including Microsoft and Meta Platforms. Meanwhile, Palantir's (PLTR) shares have skyrocketed on optimism surrounding its AI software platform, gaining 128% in the past year, and 58% in the past three months, including a sharp post-earnings rally this week. He is also short Tesla, which has been mired in a sales slump since CEO Elon Musk supported President Trump's reelection bid and took a role in the administration earlier this year at the newly created Department of Government Efficiency. Musk has since stepped down from that role, but Tesla's sales haven't recovered yet. In Q2, Tesla's revenue fell 12% year over year to $22.5 billion. "Current valuations are a poor launching pad for future investment returns," said Kass. Todd Campbell is long Nvidia, Palantir, and Tesla shares. Related: Major Wall Street analyst revamps S&P 500 target amid tumble The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
26-07-2025
- Business
- Yahoo
Veteran fund manager points to glaring problem with stocks after rally
Veteran fund manager points to glaring problem with stocks after rally originally appeared on TheStreet. Stock market rally defies gravity, leaves many behind The S&P 500's seemingly unrelenting climb from early April into July 2025 has left many investors shaking their heads. This spring, the stock market lost nearly 20% of its value amid a flurry of newly announced tariffs. Worry that tariff-induced inflation would derail the economy, causing stagflation or recession, was rampant. That worry remains, given that tariffs remain much higher than one year ago and economic data show that the U.S. economy is slowing. Yet stocks have brushed aside concerns since April 9, when President Donald Trump paused many reciprocal tariffs, clearing the way for trade a result, many investors expecting a reckoning have been left stuck on the sidelines, wondering if it's too late to buy. Veteran hedge fund manager Doug Kass understands the feeling. Kass has been professionally managing money since the 1970s, and his long career includes a stint as the research director for Leon Cooperman's Omega Advisors, one of the most famous hedge funds ever. This week, Kass discussed the recent stock market rally and its causes and delivered a stern message on risks every investor should consider after the S&P 500's record-setting run. The stock market's gains have been driven by animal spirits, speculation, and computer algos It used to be that humans on major exchanges, like the New York Stock Exchange, executed trades for other humans. Quaint, right? Now, the stock market's inevitable pops and drops are at the whim of computer programmers who have designed programs to exploit every tick higher or lower, and products developed by money-hungry Wall Street firms, like short-term options, that are designed to capitalize best on greed and fear."In the steel cage match since the market's lows in April, the bulls have been virtually unbeatable — like Muhammad Ali and Hulk Hogan," wrote Doug Kass in a post on TheStreet Pro. "But, as we all know, all the WWF matches were fixed — a feeling that the bears have developed over the last three months as retail, zero days to expiration option traders, and volatility-controlled funds have aggressively bought every dip, contributing to the generation of animal spirits and fear of missing out." The combination has led to momentum fueling momentum for momentum's sake. Computers trading with computers and speculators looking for quick gains from the options market have created a self-fulfilling cycle of upside, creating massive fear of missing out, or FOMO, for those who sold during the downturn or held off on new investments, hoping for a better entry point. The gains have been particularly eye-popping for risky stocks, particularly within emerging industries like crypto, artificial intelligence, space, and quantum computing. Circle Internet () , a stablecoin cryptocurrency player, has gained 132% since its June IPO. CoreWeave () , an AI cloud computing company, is up 165% since April 8. Rocket Lab () , which sends light payloads into low orbit, has gained 188% since its early April lows. And Quantum Computing () is up 278% since its bottom in March. What's one thing those companies share in common? None has turned a profit yet. Problems with U.S. economy may not be ignored forever The S&P 500's 24% gain in 2024 was built on the back of surging spending on artificial intelligence, the promise of earnings growth associated with using AI to streamline business practices and procedures, and the prospect of lower interest rates, thanks to the Federal Reserve shifting from hawkish to dovish monetary policy. So far, the Fed has yet to cut rates in 2025, despite lowering rates by 1% into the end of 2024, creating a headwind. AI spending remains robust, given that Alphabet recently increased its capital expenditure outlook this year to $85 billion from $75 billion. Still, cracks have appeared in the economy that didn't exist last year: Layoffs totaled 247,256 in Q2, according to Challenger, Gray, & Christmas, the most since the Covid pandemic closed businesses in 2020. The unemployment rate is 4.1%, up from 3.4% in 2023. The World Bank estimates U.S. GDP growth will be just 1.4% in 2025, down from 2.8% last year. And let's not forget tariffs, which, while likely to be less than feared in April, still represent a massive tax hike. That economic backdrop is problematic for stocks, especially following their big move higher. "The level of delusion (that tariffs will have no inflationary impact) is now beyond the pale. It simply seems the administration is following the Roy Cohen strategy on inflation and tariffs — in that if you repeat 'The Big Lie' enough (that tariffs aren't raising prices), people will come to believe it," opined Kass. Stock market valuation could create a headwind for stocks So far, markets have ignored the inflationary threat, assuming trade deals will soften the blow and corporations can make up any margin hit either by benefiting from a weaker US Dollar on currency conversion or by cutting costs. Indeed, those betting the U.S. economy will sidestep the worst-case scenario — slow growth with inflation or even recession — have profited valuations on many stocks have surged, and as a result, the S&P 500's forward one-year price to earnings ratio is 22.4, according to FactSet. A P/E ratio that high has historically depressed forward stock market returns. Absent a significant uptick in earnings estimates, now largely expected, stocks could take a breather. "My recent complete sales of numerous longs (in housing, financials, private equity and selected technology) have resulted in an expanded cash war chest, which I want in the time ahead," noted Kass on July 23. "I see about 5x more risk than reward, and I see no "margin of safety." Of course, stocks can go higher and lower than many believe possible, which is why, as John Maynard Keynes said, "The market can remain irrational longer than you can remain solvent." Sitting in cash hasn't been a winning strategy lately, something Kass concedes. "I am often wrong and always in doubt," wrote Kass. Nevertheless, he says, "The fact is, though many in the business media say the opposite, earnings estimates are dropping and not increasing — as equities climb." If so, having some cash to take advantage of any weakness may pan out fund manager points to glaring problem with stocks after rally first appeared on TheStreet on Jul 26, 2025 This story was originally reported by TheStreet on Jul 26, 2025, where it first appeared.
Business Insider
17-06-2025
- Business
- Business Insider
Billionaire Leon Cooperman tells BI the S&P 500 is 'going nowhere,' Warren Buffett crushed it — and there's more to life than work
Leon Cooperman struck a wary tone on stocks and the economy, paid tribute to Warren Buffett — and shared his biggest tip for young people. The billionaire investor told Business Insider on Monday he has a "very conservative outlook" for the S&P 500 given " what's going on in the world." The benchmark stock index has nearly doubled over the past five years to record highs above 6,000 points, and trades at a historically expensive 23 times forward earnings. "The index is going nowhere," Cooperman said, adding that investors are better off identifying undervalued stocks than betting on the whole market. Cooperman predicted the US would face a painful combination of slow growth and high inflation, as tariffs and overseas conflicts threaten to derail supply chains, disrupt production, and drive up prices. Bidding farewell to Buffett The former boss of Goldman Sachs' asset management division, who converted his Omega Advisors hedge fund into a family office in 2018, also hailed Buffett as the Berkshire Hathaway CEO prepares to step down at the end of this year. Cooperman described the legendary investor as "smart" and "rational," said he's done a " fabulous job for shareholders," and held him up as the "gold standard in the business." Buffett has transformed Berkshire from a failing textile mill into a $1 trillion world-beater during his 60 years in charge. The "Oracle of Omaha" may have decided it's finally time to step down because he's "tired" or may "fear he's missing a step," Cooperman said. "At 94, most people are dead," he added, underscoring just how long Buffett has kept going. Living a full life In the spirit of graduation season, Cooperman offered some advice for young people in both their professional and personal lives. "Love what you do — it's too demanding and difficult not to," the Wall Street veteran said. "Pursue it with a passion," he continued, adding that he spent 25 years at Goldman but it never felt work because he enjoyed it so much. Cooperman also emphasized there's more to life than hustle and grind. "I've been married 61 years to the same woman," he said, adding that his greatest success in life is "my kids still come home." Finally, Cooperman shared his approach to raising good children: "Live an exemplary life."
Yahoo
14-06-2025
- Business
- Yahoo
Veteran fund manager issues dire stock market warning
Veteran fund manager issues dire stock market warning originally appeared on TheStreet. The stock market loves climbing a wall of worry. We've certainly seen that over the past two months. Despite worry over mounting U.S. debt and tariff impacts on inflation and the economy, the S&P 500 has rallied 20%. Technology stocks have done even better. The Nasdaq Composite, home to most tech leaders, is up 27%. The rally since President Trump paused most reciprocal tariffs announced on April 2, so-called "Liberation Day," for 90 days has been impressive. However, there's good reason for concern, especially since the S&P 500 is challenging all-time highs and its valuation is arguably becoming frothy risk that stocks could lose some of their luster after their rally has caught the attention of many Wall Street veterans, including long-time hedge fund manager Doug Kass. Kass has been navigating the markets since the 1970s, including as research director for Leon Cooperman's Omega Advisors, and his experience through good and bad times helped him correctly predict the sell-off earlier this year and the market bottom in April. This week, Kass updated his stock market outlook, including a surprisingly long list of red flags for why investors should be cautious. The best set-up for tantalizing returns is a market that's oversold enough to have reset forward price-to-earnings ratios to levels near the lower end of their historical averages. In February, when stocks were notching all-time highs right before the tariff-fueled reckoning, the S&P 500's P/E ratio eclipsed 22, and most sentiment measures were flashing sell-off through early April erased much of that frothiness, driving the S&P 500's P/E ratio to 19 and below five-year averages of 19.9 — not bargain-basement priced, but low enough to help catapult stocks from severely oversold readings. As a reminder, CNN's Fear & Greed indicator was at "Extreme Fear," and bearishness by most measures was sky high in the days after the April 2 tariff announcement. Now that the stock market is back near its highs, sentiment has turned optimistic again, with CNN's measure flashing "Greed." Because earnings forecasts haven't materially increased, the S&P 500's P/E ratio is north of 21 — hardly cheap. "Valuation multiples expanded in a relief rally from mid-April to now and the S&P 500 now trades at 21x forward earnings, 35% above average," wrote Bank of America analysts to clients on June 14. "The index looks statistically expensive relative to its own history on all 20 of the valuation metrics we track." Doug Kass has tracked the market successfully through 1970s skyrocketing inflation, 1980s double-digit interest rates, the Savings & Loan crisis, the Internet boom and bust, the Great Recession, a pandemic, and the bear market of 2022. He's seen a lot over his nearly 50-year career, making his stock market warning now worth paying attention to. "Equities haven't been this unattractive since late 2021," wrote Kass on TheStreet Pro. "There is little room for disappointment. More Economic Analysis: Hedge-fund manager sees U.S. becoming Greece A critical industry is slamming the economy Reports may show whether the economy is toughing out the tariffs The concern that stocks have priced in much of the good news likely to come from ongoing trade negotiations may have merit, given this week's China trade deal news left tariffs at current levels near 55%. As the impact of tariffs flows through supply chains, inflation may start rising within months, crimping household and business spending. Unfortunately, that's not the only risk on Kass's mind. The money manager provided a long list of threats that could derail stocks' rally. It's a long list, so you may want to refill your beverage. He writes: Political and geopolitical polarization and competition will probably translate into less political centrism and a reduced concern for deficits, creating structural uncertainties, limited fiscal discipline, and imprudence around the globe ... and for the possibility of bond markets to "disanchor." The cracks in the foundation of the bull market are multiple and are deepening, but they are being ignored (as market structure changes have led to price momentum [fear of missing out] being favored over value and common sense). With the S&P 500 Index at around 6000, the downside risk dwarfs the upside reward for equities — in a ratio of about 5-1 (negative). Valuations (a 22-times forward Price Earnings Ratio) and (consensus) expectations for economic and corporate profit growth are all inflated. Being dismissed are JPMorgan CEO Jamie Dimon's and others' dour comments on complacency and a view that the corporate credit market is "ridiculously over-stretched.' Look for the soft data (see last week's weak ISM and climb in jobless claims) to move into (and weaken) the hard data led by a slowing housing market likely to provide ample near-term evidence of the exposure and vulnerability of the middle class. Below trend-line economic growth (housing will lead us lower) coupled with sticky inflation lie ahead ("slugflation") — uncomfortable for a Federal Reserve which has to make increasingly more difficult decisions. Corporate profit growth (rising +13% in 1Q2025) will markedly decelerate in this year's second half. The equity risk premium is at a two-decade low — typically consistent with a slide in equities. The S&P Dividend Yield is at a near-record low of 1.27% — and the spread between the dividend yield and the 10-year U.S. Treasury note yield has rarely been as wide. With so many possible adverse outcomes, my baseline expectation is for seven lean months ahead over the balance of 2025. Kass is clearly nervous that any single or combination of headwinds could cause stocks to give back some gains. What should investors do? Over time, the stock market goes up and to the right, so those with long-term horizons are often best off sticking to their plan, recognizing that there will be bumps and bruises along the way. However, investors with a shorter-term horizon may want to rein in some risk, pocket some profit, and increase "dry powder" to take advantage of any weakness if Kass's warning proves fund manager issues dire stock market warning first appeared on TheStreet on Jun 14, 2025 This story was originally reported by TheStreet on Jun 14, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
