- Paul Singer warned stocks look “just about as risky as I’ve ever seen,” and AI buzz is overdone.
- The Elliott Management founder said a prolonged bull run has fueled complacency and recklessness.
- The billionaire investor said governments have overspent and crypto threatens dollar dominance.
Investors are too complacent, AI is overhyped, and cryptocurrencies threaten the dollar’s dominance, Paul Singer warned.
Stock markets are “just about as risky as I’ve ever seen,” the Elliott Management founder told the “In Good Company with Nicolai Tangen” podcast this week.
Several years without a major downturn have “lulled people into thinking that they’ll always be bailed out, that there’ll never be another bear market,” Singer said. The podcast is hosted by the CEO of Norges Bank Investment Management, which oversees Norway’s oil fund.
The activist investor, who said his firm manages about $72 billion of assets, cautioned that leverage and risk-taking are rising in markets and among governments. Singer said it was “absolutely astonishing” that numerous central banks kept interest rates close or below zero for so long.
“We’re talking about deep recession-type spending programs, spending deficits, support programs at a time when there was no real recession,” the billionaire said about the stimulus bonanza that followed the pandemic.
Singer said that AI is “way over its skis” in terms of valuation, and its utility is “way exaggerated.”
Elliott’s president, co-chief executive, and co-chief investor also flagged the wave of governments embracing crypto, suggesting it could cause countries’ money supply to go “hog wild.”
A broad shift from dollars to digital tokens threatens the buck’s status on the world stage, Singer said. He highlighted the de-dollarization trend, where countries like Russia and China that aren’t happy with the greenback’s primacy are seeking out substitutes.
“If governments are supporting or endorsing cryptos, it’s an alternative to the dollar as the reserve currency,” Singer said. He questioned why American officials would back a rival to their own country’s currency: “It makes my head spin.”
Elliott has previously warned that AI company valuations are too high. The firm’s bosses said in a letter to clients last year, obtained by The Financial Times, that Nvidia and its peers were in “bubble land” and the AI buzz was excessive.
The firm’s latest portfolio update shows it used bearish put options to bet against not just AI darling Nvidia but also exchange-traded funds that track the S&P 500 and Nasdaq 100.
