by Michael Tarsala
Hedge fund manager Whitney Tilson at T2 Partners warned at the Value Investing Congress this week against doubling down on stocks following an already strong bull run.
Still, he laid out a case for why stocks are still offering a better value than bonds for long-term investors.
As part of a multi-page slideshow obtained by Business Insider, he wrote, “I am cautiously optimistic that a tepid economic recovery will continue in the U.S., but with the S&P 500 up more than 16% year-to-date, the markets have already had a good year. So I don’t see much upside
unless the economy really takes off, which I think is unlikely.”
Tilson also named four factors that could derail the U.S. economy:
1) A turn for the worse in Europe
2) A downturn for the U.S. housing market
3) The economic slowdown in China becomes a hard landing
4) A sovereign debt crisis in Japan
Yet long-term investors with a 10-year horizon are still better off buying dividend paying blue-chip stocks at reasonable multiples, rather than low-yielding U.S. Treasuries — especially given the high level of U.S. sovereign debt, according to his presentation.
