Wall Street Tycoons Begin to Bear the Market

Stocks are seriously overvalued.

    Legendary investors Stan Druckenmiller and David Tepper recently expressed that after a historic rally in the stock market, the risk-reward of holding stocks is the worst they've seen in years. And investors are wondering whether supports provided by the Federal Reserve and the $3 trillion Treasury stimulus package be enough to compensate for soaring unemployment, waives of bankruptcy and a pandemic with no end.

 

    Fund managers including Bill Miller, Paul Singer, and Paul Tudor Jones have expressed doubts about the market or economic outlook. In a phone interview on Wednesday, billionaire Leon Cooperman predicted that the government's response to the outbreak will lead to higher taxes and more regulation. He predicted that the S&P 500 would fall to around 2,200-2,800, implying a potential drop of as much as 22%. Other big-name investors have also shifted to a more defensive stance recently. Tudor Jones from Tudor Investment Corp. told clients in early May that he was investing in gold and even made a small investment in bitcoin as he sought for safe haven.

Markets wouldn't hear such divisive voices a few weeks ago, "You must always remember that someone is making a big bet short and making a lot of money if the market goes down," Trump tweeted about the stock market. "Then they'll turn around and bullish, hype it up, and drive the market up. They're making profit at both ends."

This time Trump may be telling the truth.