The biggest names in finance are coming around to a view that seemed unlikely a few weeks ago: Stocks are vastly overvalued.
Legendary investors Stan Druckenmiller and David Tepper were the latest to weigh in after a historic market rebound, saying the risk-reward of holding shares is the worst they’ve encountered in years. Druckenmiller on Tuesday called a V-shaped recovery -- the idea the economy will quickly snap back as the coronavirus pandemic eases -- a “fantasy.” Tepper said Wednesday that next to 1999, equities are overvalued the most he’s ever seen.
It’s a notion catching on among Wall Street money managers. And it’s coming as investors start to suspect that the Federal Reserve’s support, as well as $3 trillion in Treasury stimulus, may not be enough to compensate for soaring unemployment, a wave of bankruptcies and no end in sight to the pandemic. Managers including Bill Miller, Paul Singer and Paul Tudor Jones have all voiced doubts about markets or the economy.