Noted short-seller Jim Chanos told CNBC on Monday he's comfortable staying long the S & P 500 even with the broad equity index down sharply early in 2022. "You have to look at it on a stock-by-stock basis," the Kynikos Associates founder said on "Halftime Report." "In our hedge fund, we are still slightly net long, but I think the beta of our shorts is higher than, certainly, our index longs. So we're pretty hedged." "But I don't mind being long the market at 18 times earnings and short our stuff," Chanos continued. The S & P 500 traded at just under 19 times next year's earnings as of Monday afternoon. Historically, those current price to earnings ratios are a little higher than average. Chanos' appearance came as Wall Street extended its rough start to the new year, before coming off the worst levels of the day and mounting a remarkable comeback throughout afternoon trading . All three major U.S. equity indexes finished in the green. However, at their session lows, the S & P 500 and the Dow Jones Industrial Average had entered corrections on an intraday basis, down more than 10% from their all-time highs earlier this month. The Nasdaq , at Monday's low, was down more than 19% from the tech-heavy index's all-time high in November. All three benchmarks have been lower for weeks. Growth-oriented parts of the market also continued to struggle early Monday, before turning around. Cathie Wood's ARK Innovation ETF , which gained prominence after a wildly successful 2020, finished in positive territory after being down sharply as Chanos spoke on CNBC. "We're all looking at the damage that's occurring in the Nasdaq and some of the growth names and justifiably so in many cases," Chanos said. However, he said that's not the only place where he sees stretched valuations. "I think you want to avoid a lot of the stuff that's still trading ... at 50 times 2022 or 2023 earnings," he added. "There are a lot of those, and they're not necessarily in tech stocks. There are a lot of mundane businesses that after 10, 12 years of a bull market that are trading at really, really expensive levels for what they are." Chanos, who in August warned about the market entering a risky phase , recommended people do a top-to-down assessment of their stock holdings at this moment of turbulence. "You've got to go through your portfolio and just sort of say, 'What really is cheap and what's necessarily just down? They might not be the same thing," he said Monday afternoon.
David A. Grogan | CNBC