Leon Cooperman in CNBC’s “Mid-Term Report”.
Scott Mlyn | CNBC
Billionaire investor Leon Cooperman said Tuesday that stock selection was key to towering returns in the future as the overall market stagnated after a historic rebound from the pandemic.
“In terms of my long-term outlook, stocks are the best place to be honest, but I just wouldn’t expect much from the big averages,” Cooperman said at CNBC’s Financial Advisor Summit. “I am ready to be in such an environment that I have to choose my path to success.”
The chairman of the Omega Family Office is still heavily invested in stocks and believes the Federal Reserve’s view of inflation will help the market. The S&P 500 is up more than 14% in 2021 and hit another record high on Tuesday.
“The cyclical forces that determine the market outlook are generally positively positioned and that is why I am heavily invested,” said Cooperman. “We have a central bank that wants more inflation. Until that changes, I think the market is in good shape.”
More from the FA Playbook:
Here’s a look at other stories that are affecting the financial advisor business.
Despite the recent hot inflation data, the Fed remains firm in its view that any surge in price pressures will be temporary as the economy recovers from the recession. A key inflation indicator the central bank uses to determine its monetary policy rose 3.4% yoy in May, the fastest increase since the early 1990s.
Cooperman argued that companies can defend their profit margins by passing inflation on to consumers through price increases.
“Everyone worries about inflation. Inflation is positive for common stocks because inflation in the cost of businesses infiltrates sales prices that raise nominal income and earnings levels. Inflation becomes a problem for the market when the central bank moves.” Curb inflation, “said Cooperman.
The investor said he was monitoring the dollar exchange rate very closely, along with signals from the Fed and general economic performance, to gauge whether he would like a foot outside the door.
In terms of individual stocks, Cooperman announced that one of its largest holdings is fintech company Fiserv, which it believes has an attractive valuation. He said he also owns Chinese internet companies Baidu and Alibaba.