Leon Cooperman: Stocks Beat Bonds Hands Down

Friday, 11 May 2012 07:07 AM

By Dan Weil

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U.S. stocks may have dropped in recent days, but billionaire money manager Leon Cooperman finds them much more attractive than bonds.

“About 1 ½ years ago, I fell into an expression saying that stocks are the best house in the financial asset neighborhood,” though it may not be a good neighborhood, he tells Steve Forbes, chairman of Forbes Media.

And Cooperman, CEO of Omega Advisors, hasn’t changed his tune.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

“I’m not a bond buyer,” he says. “I mean, why would somebody want to buy an instrument that the government is artificially propping up? This is what QE2 [quantitative easing] and government policy’s all about.”

Ten-year Treasury yields are so low – 1.84 percent recently – that after taxes and inflation, you’re return is negative, Cooperman points out.

Meanwhile, many blue-chip stocks have a higher yield than Treasurys. “And they [stocks] have a growth component,” he notes.

Stocks also are cheap, with the Standard & Poor’s 500 Index trading at about 13 times earnings, compared to an average multiple of 15 for the last 50 years, Cooperman says.

Apple, Qualcomm, Google, Citrix, Halliburton, Kinder Morgan Energy Partners, Transocean, and JPMorgan Chase rank among his favorites.

Still, most experts are apprehensive about stocks for the short term.

“Everything is not fine with Europe. It never was, and that’s the problem,” Bruce Bittles, chief investment strategist at Robert Baird, tells Bloomberg.

“The markets will probably remain on edge over the next several weeks.”

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video





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