Leon Cooperman: Invest in Stocks, Not Bonds

Thursday, 19 Jul 2012 08:03 AM

By Nancy Stanley

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While investors have been putting most of their money in Treasury bonds, stocks are the place to be, according to Leon Cooperman, chief executive officer of Omega Advisors Inc.

Speaking at the CNBC Institutional Investor Delivering Alpha conference in New York, Cooperman compared buying Treasurys with “walking in front of a steam roller to pick up a dime,” Forbes reported.

Investors added only $1 billion to equity-based mutual funds during the first half of the year, but put $130 billion into bond funds, according to CNBC.

Editor's Note: Obama Donor Banned This Video But You Can Watch it Here

Cooperman believes the bond trade is overdone, particularly since the yield is so low on government bonds.

“U.S. government bonds are to be avoided,” he said, CNBC reported. “They are a very unattractive asset class.”

Instead, Cooperman believes stock prices will rise because they are underpriced. In addition, he said, stocks will climb because of the unlikely chance of a recession and a corresponding bear market, supportive monetary policy from central banks, low valuations and the general willingness of investors to take on risk.

“Stocks are cheap against inflation, they’re cheap against their own history, they’re cheap against interest rates, they’re allowing for slower secular growth and they’re allowing for lower interest rates,” he stated.

Cooperman thinks the economy is about halfway through a typical economic expansion and suggested that investors adopt a longer time horizon in order to make money, Forbes reported.

“[T]here’s a very good case to be made that there are several more years needed to [deleverage] and set the economy straight,” he noted. “I try to have a cross section there where I feel the long-term value is there and I’m patient.”

Cooperman recommended a broad play on U.S. equities, but there are certain stocks he is particularly fond of. These stocks include: AIA Group, Capital One Financial Corp., Express Scripts Holding Co., Gannett Co., Halliburton Co., Kinder Morgan, Metlife, Qualcomm, Watson Pharmaceuticals and Western Union.

“I have so many more I could give you,” he said, CNBC reported. “I just find myself limited by recognition of the macro risk environment.”

These risks include the European debt crisis, uncertainty about the U.S. presidential election and the looming “fiscal cliff.”

“It might require patience,” he said.

Editor's Note: Obama Donor Banned This Video But You Can Watch it Here



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