Leon Cooperman is one of the smartest hedge fund guys out there, but he faces the same dilemma as all of his colleagues and for that matter everyone else with money to invest.
That is, there’s a definite feeling of danger to come, but no one’s quite sure what’s going to trigger it and when it’s going to happen.
Speaker after speaker at the Skybridge Alternative Investment (SALT) conference talk about the danger of debt and deficits.
They feel it lurking, like a run of snake-eyes at the craps table, but they’re just not sure how to stop it or when to finally bail out and quit riding the stock market bullet train.
“We’re heading for a crisis,” said Cooperman, chairman of Omega Advisors. “I just don’t know when.”
Cooperman recounted a story back in his days at Goldman Sachs , where he served as chairman, when the company conducted a public relations campaign in the 1970s to warn about budget deficits.
He still feels the same way and believes the current shortfall will cause an eruption in the markets. (Disclosure: My new book, “Debt, Deficits and the Demise of the American Economy,” co-authored with Peter J. Tanous, forecasts the damage will happen sooner rather than later.)
But here’s the rub: He, like so many others, doesn’t see the day of reckoning on the near horizon—“in the current cycle,” as he said this morning. So until then, it’s status quo in terms of where to put your money.
“People are scared. They don’t know what to do,” Cooperman said. “We all know we’re kicking the can down the road. We don’t know when it will hit. (Until then) equities are the best value in a bad neighborhood.”
In fact, Cooperman delivered a basket of stocks he believes will be strong plays now: E*Trade , General Motors, Transocean, Teva Pharmaceutical , Mortgage Guaranty Insurance and CVS .
Nevertheless, his concern about the future is apparent, even if he thinks the coast is clear for now.
“I am worried. I don’t think equities are priced for a crisis,” he said. “I think it’s further out. I think right now, we’re OK.”
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