Leon Cooperman: ‘The Market’s Not Cheap, but It’s Not Expensive’
Leon Cooperman in an interview with CNBC
On Tuesday, October 24, 2017, legendary investor and chair and CEO of Omega Advisors, Leon Cooperman, shared his view on market movement, market valuation, and his top stock picks in an interview with CNBC’s Halftime Report.
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Leon Cooperman on the market movement
Legendary hedge fund manager Leon Cooperman recently said, “the market’s not cheap, but it’s not expensive…it’s approaching normalization.” As the S&P 500 Index is making new highs, investor sentiment is also improving.
However, Leon Cooperman said, “most bull markets end in overvaluation. I don’t think we’re overvalued, we have another 10 to 15 percent to go for that to occur.” On a year-to-date basis, the S&P 500 Index (SPY) returned nearly 15% as of October 31, 2017.
The S&P 500 Index is presently trading at a forward price-to-earnings ratio of 17.8x, which is higher than the historical average of 15x. Cooperman believes this is fair valuation. The S&P 500 Index’s EPS (earnings per share) stood at $114.01. Cooperman expects that if the tax reform bill passes, then the EPS of the S&P 500 Index could reach $150 by 2018.
If earnings grow substantially in the upcoming year, then it could support the higher valuation of the S&P 500 Index (VOO) (IVV) (IWM). The strong improvement in earnings growth and hopes for reforms are supporting the bull market.
In the next part of this series, we’ll analyze Leon Cooperman’s view on the possibility of a market decline.