- Harris Kupperman, the president of Praetorian Capital Management and author of the “Adventures In Capitalism” blog, says that his gut tells him to “sell everything.”
- “I genuinely believe there’s a crash coming,” he told Business Insider in an exclusive interview.
- Kupperman also thinks the Federal Reserve’s policies have created a “Ponzi economy” — and that a day of reckoning is nearing for the likes of WeWork and Tesla.
- Click here for more BI Prime stories.
Harris Kupperman, the president of Praetorian Capital Management and CEO of Mongolia Growth Group — a $6.1 million real estate investment firm — is currently in the midst of selling 10% to 50% of almost every position he has.
And his reasoning behind the unwind is simple: he’s sees a massive market crash on the horizon.
In an exclusive interview with Business Insider, Kupperman sat down to discuss his lastest blog post, titled “Getting Ready For The Stock Market Crash…” — and he’s not coy in sharing his thoughts on what he calls the “Ponzi economy.”
“I genuinely believe there’s a crash coming,” he said. “I’ve been through 2 crashes in my life, and I think this is the third one.”
That’s stark warning — and Kupperman’s thesis isn’t coming out of left field. In fact, he shared a wide range of reasons for the inevitable undoing including: funding stresses, unprofitable companies selling at nosebleed valuations, structural imbalances, excess debt, and “asinine monetary policy.”
“All the makings of a crash are there,” he mused.
But at the heart of the matter lies what he views of the real culprit underlying it all: the Federal Reserve. He thinks their loose monetary policies have resulted in an unsustainable environment.
“When you push liquidity through the system like they have the last ten years, you create a giant bubble,” he relayed.
And he’s just getting warmed up. To Kupperman, the Fed’s actions have created a “Ponzi sector.”
“Ponzi stocks are things like WeWork or Tesla or other blatant frauds,” he said. “The Ponzi sector being all the companies that have no chance of ever earning a profit, yet they continue to grow revenue.”
Those are harsh words for investors who own a piece of these companies. But don’t be so quick to dismiss his perspectives. Neither of these firms are anywhere close to turning a profit, and the former has experienced a CEO change, a failed IPO, and roughly a $40 billion cut to its valuation in the last six weeks.
“These things literally have no economic rationale to exist expect for the fact that liquidity has been pushed through the system, and people keep buying shares because they believe that there’s some other sucker who’s even dumber than they are,” Kupperman said.
Against that gloomy backdrop, Kupperman says he’s looking for sectors that are widely hated and undervalued. He’s built his success by going against the grain and waiting for an inflection point.
Some of his favorite plays today are: shipping, energy, uranium, and the Greek economy — places a conventional investor wouldn’t dream of touching in today’s market environment.
If you agree with his thinking, an investor looking for broad exposure to these ideas could purchase:
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