Why it's time to get short: Jim Chanos
Billionaire investor Jim Chanos, who famously shorted Enron before the company collapsed, told CNBC on Thursday that now is one of the best times in recent memory to get short.
"I think the risks have increased in the U.S. market rather dramatically in the past year," Chanos told "Closing Bell." "Are we at some sort of top? I have no idea, but I do know that people that were eschewing risk in 2009 when they should have been taking it are now embracing it in late 2013."
From Fed stimulus to cheap valuations, Chanos said that for years, investors have made the same arguments in support of the market but that the risks to the U.S. market now are more severe than they were in 2009.
"We're finding a meaningfully ... larger [number] of opportunities on the short side at the end of 2013 than at any time since '06, '07," he said, referring to the period that the financial crisis unfolded.
Elsewhere in the market, the prominent short-seller said China is in a lot of trouble.
"We've had a bit of a banking crisis brew up all over again in China this week," Chanos said, indicating reports that a major coal company had defaulted on a large amount.
Concurrently, he noted, an important bank admitted that it had missed a number of loan payments earlier this year. As a result, rates have skyrocketed, even as the People's Republic has pumped money into the system to calm fears.
"We're questioning the credit-driven nature of this investment-led economic growth model," Chanos said.
He recommended steering clear of industrial equipment maker Caterpillar, for example, as well as hard industrial commodities such as iron ore and coal. China's reputation as "the source of unending demand could be questioned," he said, which could be problematic as more commodity supply comes onto the market.
Meantime, Chanos continues to like Visa and MasterCard because they have good business models and because "they're against other payment processors who we think are on the wrong side of the technology curve."
He is also short CGI Group—the parent of CGI Federal, which built HealthCare.gov. Its mishandling of the website is not the only reason for his short, which has more to do with the company's growth, Chanos said.
The founder of Kynikos Associates warned investors about companies that grow only via acquisitions, though he didn't offer examples.