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This morning, word came from David Tepper of Appaloosa that he remains optimistic about the market. Tepper told CNBC, quote: "I love riding a horse that runs." We are taking long positions and continuing in the same vein. At some point the market will reach a level where I will slow down. You'll have to get off this horse eventually.
Well, I have additional information from a source who reported that Tepper significantly increased his investment in December. I was told this was his typical strategy. The Fed pumped money into the system. Tensions with China have eased, and for him the signs of where the market is heading have become quite obvious.
Whereas in previous months there was no clarity due to all the hype around trade. I was told that Appaloosa showed better results in December and is showing good performance in January. It's probably safe to say that Tepper was also building up his individual positions. He doesn't have a huge stock portfolio, but if he thought the market would go up, companies like Micron, Amazon, Alibaba, Alphabet, Facebook could be where his money went, in addition to playing the market itself.
Now Stan Druckenmiller also says today on CNBC that he remains optimistic about the market in the medium term. So, Weiss, I turn to you. Um, that seems like a pretty simple way of thinking, and that's what makes David Tepper who he is . The numbers, his numbers speak for themselves , but the main thing is his ability to take everything and reduce it to the simplest.
The Fed is your friend. The Fed is pumping more money into the system. Tensions in relations with China have decreased. Time to be optimistic. Yes. So, that's what Dave thinks. And one more thing: people like Dave, and Dave in particular, more than anyone I know, make big bets. So when he's confident in his theory, and he is confident now, then you know he'll put money into it.
He put them to work. He invests them in liquid assets because he is obsessed with liquidity and risk management. In our conversations, he said that, in fact, now everything depends, of course, on how quickly the market moves, but until the noise around the presidential elections appears, at least until March, everything will be fine, and then we can reassess the situation.
Of course, if the market grows by 10% by then, that's a different matter. But if you go back to what he said last year, you can see a market with a multiplier of 22. I don't know if he's talking about 24 now. Given the rates, and if earnings support this growth, activity, liquidity from the Fed, then you can get to that kind of multiplier .
So I don't think anyone thinks it's too expensive right now. I don't believe Dave thinks so. Of course, value players may think so, but this is a momentum market. So it's momentum that drives him. Earnings reports, I would say , are generally pretty good, some today, you know, from all sectors of the economy, so I'm investing.
David Tepper and Stanley Druckenmiller mostly manage their own money, or almost entirely. Do you think there is a difference when you do it for yourself and not answer to clients, that is, can you quickly change your mind without reporting to anyone, and does this give you an advantage? Well, that's true about Dave...I don't know if that's true, Dave, but no, that's the way Dave does things.
And Dave's view has always been this: first, he has returned so much capital in recent years; that's what I mean, so if people want to be with him, fine; if not—it's their choice. But if you invested a dollar in it at the start, then 20 years later it was worth 150. So who would refuse, right? There must be a reason why he has something on his desk .
Yes. I was told they were still there. This is the anatomy of a bull. Even though you said it. It's one thing to think that the market can grow. And it's quite another to be able to act accordingly. Maybe it's not high math that you thought, " Okay, you know, the Fed is here again." This is what you need for support.
The Fed stepped in. Tensions with China are easing . But it's not just about being able to see it. This is the ability to invest a lot of money in a business. And that's exactly what I was told happened in December. The ability to be more optimistic than before because certain obstacles, difficulties, whatever you call them, have been removed.
And he's done this before, right? I mean, he did it a year ago, right? In December 2018. Wasn't that the call the day after Christmas? But I think we have to be careful about comparing what David Tepper or someone like him does to what the individual investor or most viewers of our show should do. And I've been saying this for weeks now.
I think instead of making huge bets, we need to be disciplined and rebalance. This can be done from an asset allocation perspective . I mean, after last year, it's impossible for you not to have an imbalance of stocks and bonds relative to your strategic asset allocation, or, in my case as a portfolio manager, you need to reduce the share of leaders and add to those assets that may not have performed so well .
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