Taps Coogan – February 28th, 2023

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Steve Eisman, fund manager at Neuberger Berman and investing legend from the Global Financial Crisis, is back at CNBC elaborating on his outlook that we’ve experiencing a paradigm shift in investing away from the growth-above-all emphasis on tech companies.

 

Some excerpts from Steve Eisman: 

“We’re buying bonds, especially treasuries… In this world two years is an awfully long time. I think it’s early (for long duration). I suppose people who are going long are expecting a recession. I think the times are so complicated right now…”

“Let me define paradigm first of all. It’s a set of assumptions that are so deeply imbedded in your head you don’t even know they’re there. You don’t believe in your paradigm, you inhabit it. That applies to investing as much as it applies to a lot of other different things. The paradigm that has existed for the last ten years is that because rates have been zero, people have been paid to take risk and so they’ve invested in tech stocks and they’ve invested in hypergrowth stocks – meaning revenue growth, no earnings, and valuations be damned.”

“So assuming that we take the Fed at its word, which is obviously questionable, and rates stay higher for much longer, I think the days of people beating the market by just investing in tech are going to be over and we are going to go to a new paradigm. And I’m not 100% what that’s going to be… There will still be tech stocks to invest in but I think the days of companies that have no earnings or multiples of 200x will be gone. I think there will be more themes like infrastructure, maybe greenification, bringing back industrialization of the US, …and bonds.”

Sounds about right. There is more to the interview, so enjoy it above.