High-profile investor Leon Cooperman predicted that the S&P 500 could fall 40% from the highs it reached early this year, as the economy is likely to tip into recession in 2023.
Looking further out, the founder of Omega Advisors also gave a downbeat assessment of market dynamics for the foreseeable future, with the stock market going into a long period of stagnation after the run-up it experienced in the past couple of years.
“My basic viewpoint is that the 4,800 of the S&P is likely to be a high for quite some time,” Cooperman told CNBC.
The S&P 500 reached an all-time high of 4,818.62 on Jan. 4 but has generally lost ground since. The index has fallen more than 20% in 2022, marking a bear market. A 40% drop from that peak would bring the index to just under 2,900 — a level last seen in May of 2020.
Cooperman argued that the amount of stimulus pumped into the system during the pandemic had pulled demand forward and will keep the economy afloat in 2022. However, high energy prices and increasing interest rates will spark a downturn next year.
“I think the price of oil or the Fed will push us into a recession some time next year,” he said. “I think there’s too much liquidity in the system to experience a recession this year.”
The billionaire investor, who is currently chairman and CEO of the Omega Family Office, also gave a pessimistic long-term assessment of the economy. He described himself as a long-term bear, blaming “very inappropriate policies” from Congress and the Federal Reserve.
“I’ve been a seller on strength and not a buyer on weakness,” Cooperman said of his current strategy.
For more on how to position your portfolio ahead of a possible recession, Wells Fargo has announced its recession stock portfolio.