James Chanos and Leon Cooperman at the 2019 Delivering Alpa Conference on September 19, 2019 in New York.
Adam Jeffrey | NBC Finance
Short seller Jim Chanos said the belief that the Fed will forever save the stock market from massive losses is reckless for investors.
“The idea of Fed put options and the idea that the Fed is always going to be there to bail out my bad investment decisions is really not a persuasive investment to stick around for the long term,” Chanos said on CNBC’s “Halftime Report” Monday. policy.”
“The fact that it’s going to save the stock market with a pre-determined level of losses … I think it’s a very dangerous idea to hold on to,” he added.
The market sell-off accelerated on Monday, with the Dow Jones Industrial Average falling as much as 1,100 points, as investors braced for a potentially hawkish Federal Reserve this week. The S&P 500 also fell into correction territory, down more than 10% from its all-time high.
The Fed will wrap up its policy meeting on Wednesday. Central bank officials said in the minutes of their December meeting that they expected not only to raise interest rates and scale back asset purchases soon, but also to start shrinking their balance sheets. Nearly two years after the loosest monetary policy in U.S. history, the central bank’s move would mark a radical shift in policy.
Chanos said his hedge fund is still slightly net long in the market despite the recent sharp decline in the stock market. The long-term investor said investors should avoid names with high multiples.
Chanos, the founder of Kynikos Associates, is a well-known Wall Street short-seller with a long history of identifying fraud.
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