Hedge Fund Manager David Tepper on Investing in 2013
Appaloosa Management CEO and Co-Founder David Tepper was on Bloomberg Television’s “Market Makers” discussing investing and his 2013 outlook for the markets and economy. Tepper corrected host Stephanie Rhuhle who said his fund was up 24% last year (2012). That number was through October and the actual gain was 30%, Tepper said.
Tepper said he’s bullish based on valuations where the S&P 500 is trading at a low multiple of 13 times this year’s earnings and 11 times next years. This, along with unprecedented money creation, including Japan’s two percent target, and junk yielding 5.67%, has created the biggest gap he’s seen in his lifetime, Tepper added.
Tepper explained why he doesn’t anticipate a debt ceiling fight.
Tepper stated you don’t need a shift from bond funds to the equity market to keep stocks moving up; the increase can come from incremental money being invested in equities instead of fixed income.
Tepper pointed out a Goldman Sachs report indicates pensions are underweighted equities by a “huge” 20%, along with insurance companies being incredibly underweight equities. He does believe a shift is coming and retail investors will participate at some point.
Tepper indicated the junk bond market is a “full” market which will eventually move to extreme value, but still has room on the upside, however, equities should do better.
Finally, Tepper said the U. S. is on the verge of an “explosion of greatness.” He recommended people listen to the song “America” by Charlie Daniels.
Two years ago, Tepper was bullish on stocks, particularly Dean Foods (DF) and Micron Technology (MU) [link].