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Hedgie
Hedgie
Articles (10)  | Author's Website |

Bloomberg: Appaloosa's Tepper Says Stock Markets Not in Bubble

November 22, 2013 | About:

Following my previous article: Is this the beginning of a secular bull market?[/b]David Tepper has made another appearance on Bloomberg and opined that the market is NOT in a bubble.

Tepper was the highest paid hedge fund manager in 2012 and he is known for making sound market calls. Head over here for the full interview.

[b]Key takeaways:


1) The market is not in a bubble. He uses S&P and Nasdaq forward P/E multiple to illustrate his point. The below chart shows the P/E multiple (not forward) of S&P500 which has rallied from 17x (1995) to 31x (2000) pre-Internet bubble. Now post-GFC 2008, the market's P/E has been in range bound between 10x to 18x, still well below an implied P/E multiple of 25x.

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2) Tepper owns s large position in airline stocks which have performed well for his fund.

3) The taper may just provide a knee-jerk drop of 5% to 10% in the market given the stronger underlying U.S. GDP growth next year.

4) He still owns U.S. and European banks.

5) Tepper opined that long/short equity funds are in precarious position given they are only net long 60%, not pure long, only of 100% which he thinks L/S funds cant get long enough.

Given Tepper's stellar performance, his words do provide a prescient call.

About the author:

Hedgie
Agnostic trader. CAIA and CHP charterholder. Twitter: @hedgefundtrades

Visit Hedgie's Website


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