Billionaire investor Paul Tudor Jones says the stock market could be headed toward a blow-off top and “massive” price appreciation.
Jones says in a new interview with CNBC that the market “feels exactly like 1999.”
“I don’t know whether we’ll actually replay it exactly, but I think all the ingredients are in place, and certainly from a trading standpoint, you have to position yourself like it’s October of ’99. I don’t see why you would do anything but that. And remember, the Nasdaq doubled between the first week of October ’99 and March of 2000. So if it looks like a duck and quacks like a duck, it’s probably not a chicken, right?”
The founder of Tudor Investment Corporation notes that the greatest price appreciation in bull markets typically occurs in the 12 months preceding the top.
“If you don’t play it, you’re missing out on the juice. If you do play it, you have to have really happy feet, because there will be a really, really bad end to it. And my guess is that I think all the ingredients are in place for some kind of a blow-off.”
Jones says the one major difference between now and 1999 is that the current market has even more explosive potential.
“In 1999, we were looking at a rate hike in November. Now we’re looking at a rate cut. We were looking at four more rate hikes before we actually topped in 2000; now we’re looking at 3-4 rate cuts, probably at least. So you have monetary policy that’s going to take us to real rates of zero or less, probably – depending on the next Fed chair.
And then the big difference is, obviously, fiscal policy. We had a budget surplus in ’99/2000, now we’ve got a 6% budget deficit, so that combination, that fiscal/monetary combination, is a brew that we haven’t seen since I guess the post-war period or the early ’50s… and that was crazy times.”
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