Billionaire investor Stanley Druckenmiller says work-from-home stocks are overvalued, and a rotation into value names is 'entirely rational'
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- American billionaire Stanley Druckenmiller told CNBC that work-from-home stocks are pretty pricey, and a pivot into some of the beaten-down value stocks would be reasonable.
- Druckenmiller advised investors against going short, as positive news on the COVID-19 vaccine front saw US stocks jump to record highs on Monday.
- "It's nuanced, but there are a lot of companies that will be direct beneficiaries (from a COVID-19 vaccine), and they probably have further to go," Druckenmiller said. "I certainly wouldn't want to be net short the market."
- The billionaire expects inflation to rise in the next five to six years. He believes gold and bitcoin are good hedges against inflationary pressure.
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Billionaire investor Stanley Druckenmiller told CNBC on Monday that work-from-home stocks are overvalued and a rotation into value stocks would be practical.
"You've had a bunch of equities benefitting greatly from work from home," Druckenmiller said on CNBC's "The Exchange" program. "A lot of money has rotated into them. They are overvalued."
"But then you've got a whole other sector of the market that has struggled mightily because of COVID," he said. "They're selling at under-value relative to, say, a three-to-five-year outlook. So the rotation into that would seem entirely rational."
Druckenmiller, whose net worth is around $5.8 billion, cautioned against shorting the stock market after developments on the vaccine front on Monday. US drugmaker Pfizer and its German biotech partner BioNTech said their experimental coronavirus vaccine succeeded in the final stage of clinical trials.
US stocks rose to record highs after the companies said no serious safety concerns had been observed throughout the trial. They expect to produce over 50 million doses by the end of 2020 and more than 1 billion doses in 2021.
"It's nuanced, but there are a lot of companies that will be direct beneficiaries (from a COVID-19 vaccine), and they probably have further to go," Druckenmiller said. "I certainly wouldn't want to be net short the market."
The head of the Duquesne Family Office expects inflation to rise in the next five to six years alongside the US central bank's efforts to provide federal stimulus relief. He also mentioned gold and bitcoin are good ways to hedge against potential inflationary pressure, benefiting metal miners like Rio Tinto, BHP, and Freeport-McMoRan.
Raoul Pal, a former Goldman Sachs hedge-fund chief, said Druckenmiller's endorsement for bitcoin cannot be overstated. "That has removed every obstacle for any hedge fund or endowment to invest [in bitcoin]," he said in a tweet Monday.
Pal expects the price of bitcoin to hit $1 million in five years.
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