November 6, 2020
Billionaire Investor Warns 'There's Just Too Much Debt In The System,' Predicts Stock Market Will Suffer

Billionaire investor Leon Cooperman, who serves as the chairman and CEO of Omega Advisors, has warned that he is pessimistic about the long-term future of the stock market due to "too much debt" in the United States' business and financial systems.

According to CNBC, Cooperman specifically pointed to the combination of the U.S.'s increasing national debt and the Federal Reserve's pumping of "free money" into the market.

"I think the overwhelming reality is the Fed is just creating this environment of free money. You have to kind of make a judgement whether that's justified, how long it's going to last and what impact this has on the longer-term outlook," he said on CNBC's Squawk Box.

"Longer term, I probably have a dissenting view than Wall Street because I'm of the concern as to who pays for the party when the party is over?"

Traders work on the floor of the New York Stock Exchange.
Getty Images | Scott Heins

The warning comes as the United States has spent more than $6 trillion on coronavirus-related aid relief as the pandemic has forced businesses to shutter. The extraordinary amount is nearly one-third of the country's gross domestic product.

Though Cooperman agreed that the crisis warranted the Fed's zero percent interest rates and mammoth monetary influx, he predicted that there would likely be negative consequences for the policies in the future.

"There's just too much debt in the system, and I think ultimately there will be a problem," he said.

Cooperman also pointed to the stock market's robust rebound after experiencing severe losses during the spring's COVID-19 lockdowns. He said his analysis showed that "whenever you bought into the S&P 500 [and] when it sold at 22 times earnings or more," the following five-year return would often languish at close to zero.

As a result, he concluded that he believed Wall Street averages would be "very little" in the years ahead.

However, Cooperman did point to some bright spots on the horizon in the financial world. For example, he claimed that a second stimulus package would likely give the markets a "tail wind." He also said that he believed the Federal Reserve would be forced to change its policies for the better.

Cooperman is not the first financial expert to voice concerns about the future of Wall Street. Mad Money host Jim Cramer had previously warned that election week would be one of the most "confusing" of his career.

Wall Street appeared to suffer losses earlier this week as investors were allegedly spooked by the uncertainty of the election. However, stocks began to rally as results became more finite and former Vice President Joe Biden began solidifying his lead, per The Inquisitr.