Paul Tudor Jones thinks stock prices are crazy.
This “crazy stock market run reminds me a lot of 1999” said Paul Tudor Jones, founder of the Tudor Investment Corporation.
Paul Tudor Jones predicted Black Monday in 1987, tripling his money during the event due to large short positions. He was ranked as the 40 Highest-Earning hedge fund managers by Forbes Magazine in February 2013.
“crazy stock market run reminds me a lot of 1999”
PAUL TUDOR JONES
Paul Tudor Jones thinks stock prices are crazy view was made by the billionaire hedge fund manager at the recent World Economic Forum in Davos, Switzerland. “It reminds me of a lot of the early ’99. In early ’99 we had 1.6% PCE, 2.3% CPI. We have the same metrics today,” said Paul Tudor Jones.
The final stages of the bull market in 1999 experienced a melt-up, similar to today’s, which ultimately ended with the popping of the dot-com bubble.
So Paul Tudor Jones thinks stock prices are crazy view in 2020 because it too is an even higher octane bubble than the dot-com bubble
“We are just again in this craziest monetary and fiscal mix in history. It’s so explosive. It defies imagination” said Paul Tudor Jones.
However, despite Paul Tudor Jones’s comparison with stocks in 1999 and today the hedge fund manager went on to make a few distinctions with stocks back then and today.
“We are just again in this craziest monetary and fiscal mix in history. It’s so explosive. It defies imagination”
PAUL TUDOR JONES
“The difference is fed funds were 4.75%; today it’s 1.62%. And back then we had a budget surplus and we’ve got a 5% budget deficit,” Jones added. “Crazy times.”
What’s more, here is another reason why Paul Tudor Jones thinks stock prices are crazy.
The market price to sales ratio is now higher than the dotcom bubble
The S&P 500 is now even more overvalued than ever, well above its dotcom bubble peak.
Stocks are overvalued according to the popular measure of price-to-earnings (P/E) — which compares the price of one share of stock to one year of per-share earnings relative to recent history.
The S&P 500 index SPX, -0.40% is trading at 18.6 times forward earnings, according to FactSet data, above the average ratio of 16.7 during the past five years and 14.9 over the past ten.
“With fiscal and monetary policy in check, or checkmate perhaps the mother of all multi-asset bubbles is about to burst”
The price/sales ratio, also at a record high supports the view of why Paul Tudor Jones thinks stock prices are crazy because relative to sales, the S&P 500 is at record highs
Paul Tudor Jones thinks stock prices are crazy, so if stocks are froth and cash is trash, where next for this central bank induced mad bull market?
Paul Tudor Jones warned that the new “curveball” to derail the bull market could be an outbreak of the coronavirus.
With fiscal and monetary policy in check, or checkmate perhaps the mother of all multi-asset bubbles is about to burst. Is this the greatest short opportunity of the century with the great escape to haven assets about to play out? Things are about to get interesting. Why else does the Davos elite meet in secrecy, banning media and journalists? If there is nothing to hide, why the secrecy?
