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Billionaire investor Paul Tudor Jones said the stock market today is reminiscent of the latter stages of the bull market in 1999 that saw a giant surge that ultimately ended with the popping of the dotcom bubble.
“We are just again in this craziest monetary and fiscal mix in history. It’s so explosive. It defies imagination,” Jones said on CNBC’s Squawk Box On Monday at the World Economic Forum in Davos, Switzerland. “It reminds me a lot of the early ’99. In early ’99 we had 1.6% PCE, 2.3% CPI. We have the exact same metrics today.”
“The difference is fed funds rate 4.75% today it’s 1.62%, and back then we had budget surplus and we’ve got a 5% budget deficit … Crazy times,” Jones added.
Asked if investors should sell now to avoid a blow-up like the one that took place in March of 2000, Jones said, “Not really. The train has got a long, long way to go if you think about it.”
The legendary hedge fund manager and trader noted that the Nasdaq Composite more than doubled from this similar stage to the dotcom bubble top. “That’s a long way from now. At the top theoretically, rates [would] be substantially higher.”
The stock market hit a peak in 2000 before the dotcom bubble burst. The tech-heavy Nasdaq Composite approached 5000 in early 2000 then dove thousands of points, crushing a whole class of investors.
However, Jones, founder and chief investment officer of Tudor Investment Corporation, warned that the “curveball” to derail the bull market could be the outbreak of a new coronavirus.
“That’s a big deal. If you look at what happened in 2003 … stock markets sold off double digits. If you look at the escalation of the reported cases, it feels a lot like that,” Jones said. “There’s no vaccination. There’s no cure… If I was an investor, I’d be really nervous.”
The virus, stemming from Wuhan, China, has killed six people with confirmed cases totaling nearly 300 as of Monday.