Here’s what it will take for one billionaire investor to start unloading his stocks

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He says 75% of his fund is in stocks... but that could all change

John Templeton once famously said, “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.”

Leon Cooperman, billionaire chairman and CEO of Omega Advisors, says we could be “knocking on the door of euphoria” if the rally continues. ‘The market is in a zone of fair valuation... if we have a big move from here, I think it’s the close-out move.’ That big move, he told CNBC on Thursday, would amount to a rally in the S&P 500 index SPX, -0.13% above 3,100. At last check, the broad market gauge was bouncing around all-time records with a 1% gain at 2,951. The narrower Dow Jones Industrial Average DJIA, -0.13% was also higher.

“I’d be reducing my exposure” to equities if that level is reached, Cooperman said. He has about 75% of his fund, which is now closed to outside investors, in stocks, with the rest invested in fixed income. Cooperman, like many others, questioned the wisdom in cutting rates when the market’s already banging out new highs. He described the Fed’s monetary policy, which is signaling potential rate cuts later this year, as “inappropriate,” and said the fed funds overnight lending rate should be at 3% not 2%. Shawn Langlois Shawn Langlois is an editor and writer for MarketWatch in Los Angeles. Follow him on Twitter @slangwise.

 

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betai/ei[(ri-rf)/betai-c*] is the share of the portfolio to be invested in one stock.,where ei=unsystematic risk of the stock ri=stock return rf=risk off rate c*=cut off rate betai=sensitivity of stock return vis a vis market return cut off rate calculation is bit lengthy.

markets rise on hope, peak on lies, and plummet on the truth

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