David Tepper thinks coronavirus is a game-changer. Tepper’s updated his view of stocks following last week’s corona selling. “You have to be careful, because it may be a game-changer. So you’ve just got to be cautious’ said David Tepper.
Just one month earlier David Tepper was touting a continuing stock pull market view. In a recent piece, entitled David Tepper bets bull market has legs, the billionaire investing was betting that the longest bull market in history has legs.
“You have to be careful, because it may be a game-changer. So you’ve just got to be cautious”
“I love riding a horse that’s running” David Tepper told CNBC’s Joe Kernen in an exclusive email. “We have been long and continue that way”.
I was skeptical arguing that this central bank liquidity induced bull market can not go on indefinitely. In other words, endless central bank liquidity is unsustainable, in the long run.
Now David Tepper thinks coronavirus is a game-changer
The coronavirus has “certainly ruined the environment” for stocks that were in place a few weeks ago, said David Tepper.
But it looks like we are back to that warped formula again where bad news is good news because it means more central bank liquidity to the rescue.
Yes, it is about central bank liquidity where even the apocalypse is bullish, if it translates to more central bank liquidity.
“I love riding a horse that’s running”
So the markets are having another corona moment, hitting all-time highs.
David Tepper thinks coronavirus is a game-changer, but what does he mean?
Perhaps David Tepper is telling us between the lines that markets are tiring of the central bank’s liquidity.
But on the day of the announcement of the People’s Bank of China’s liquidity injection, China’s CSI 300 index fell as much as 9.1%, its worst opening in almost 13 years.
Typically, stocks would rally on just the smell of liquidity injection, but these days they need more of a jump start.
“If you’re a long-term person, you better not be leveraged” – David Tepper
David Tepper thinks coronavirus is a game-changer and is warning investors not to be leveraged in this bull market
“If you’re a long-term person, you better not be leveraged” said David Tepper, who heads Appaloosa Management with $14 billion of assets under management.
Leveraged investing is a technique that investors use to seek higher investment profits by using borrowed money. The profits come from the difference between the investment returns on the borrowed capital and the cost of the associated interest.
Leveraged investing can expose an investor to higher risks.
So David Tepper thinks coronavirus is a game-changer making leveraging too risky
The risk of being leveraged particularly late in a long term secular bull market, with a black swan coronavirus risk, is that markets could suddenly snap back to reality.
Put another way, central banks could be forced or decide that they can no longer continue with endless liquidity injections, bearing in mind pumping the market with liquidity has consequences.