Steve Cohen’s late cycle view is the latest Wall Street titan to thrown the towel in on this aging stock bull market and joined the heavyweight bears.
The growls are now growing louder with each day passing. Perhaps it started with the most famous of all European banking dynasty when I noted in a piece, Lord Jacob Rothchild’s words of caution would be ignored at one’s own peril, back in the summer of 2018.
“at some point, we’re going to enter a bear market, and it’s going to happen in the next year and a half, maybe two”
So Steve Cohen’s late cycle view is a late addition to the bear pact, bearing in mind Rothchild’s cautionary view in August, then a litany of billionaire investors becoming risk averse followed by a seasonal stock market sell-off in October (which now appears to be evolving into something more acute than just a correction).
Steve Cohen’s late cycle view means that the billionaire legendary Wall Street trader reckons that immediate, short-term profits from stocks are going to be tight going forward.
“I don’t think returns over the next two years are going to be very good. If the market hangs in there, there’s just going to be marginal returns.”
Cohen was speaking November 13 to a packed house at a fundraiser, which included former New Jersey governor Chris Christie, according to the Financial Times.
Steve Cohen’s late cycle view is somewhat unusual for the trader who tends to keep tight-lipped in public about the stock market’s direction or his latest trading strategy.
“I don’t think returns over the next two years are going to be very good. If the market hangs in there, there’s just going to be marginal returns”
“We’re definitely a late cycle,” explained Cohen, who rarely comments publicly about the stock market. “So at some point, we’re going to enter a bear market, and it’s going to happen in the next year and a half, maybe two.”
Steve Cohen’s late cycle view is based on the investor/trader forecasting a slowing US economy going forward which he believes will eventually lead to a bear market as early as the second quarter of 2019.
“I’m not comfortable, I’m not uncomfortable, I’m somewhere in the middle,” Cohen reportedly said.
But despite Steve Cohen’s late cycle view the billionaire investor has managed to raise $5 billion from outside investors for his new hedge fund Point72.
“It was actually not hard,” Mr. Cohen told a sold-out audience of his fund-raising at a 92nd Street Y event, which included former New Jersey governor Chris Christie. Sure, being a full-blown clan member has its perks!
“I did only 10 or 15 meetings, it was really easy,” he said. “I made one trip overseas to see one client and my staff did an amazing job and we raised probably $5bn.”
“up until recently, Steve Cohen had been barred from taking
outside investor money”
Steve Cohen is Wall Street’s comeback kid
In 2013 Steve SAC Capital Advisors firm pleaded guilty to securities fraud, insider dealing (and got no jail time).
Moreover, up until recently, Steve Cohen had been barred from taking outside investor money. But a lot of water has passed under the bridge since then and today Steve Cohen is back in the game.
Steve Cohen’s late cycle view suggests that the billionaire investor is not playing the long game
At one point, interviewer Glenn Fuhrman, the co-founder of MSD Capital, pointed out to Mr. Cohen that he was “not Warren Buffett”.“And Warren Buffett’s not me,” he responded. So my guestimate is that Steve Cohen, now cashed up to his eyeballs is either waiting it out on the sideline for the crash only then to snap up value assets at a bargain, building up a big short portfolio or both.
Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.