Citadel's Ken Griffin: Valuations Stretched But "Very Constructive" Environment For Stocks ~ market folly

Tuesday, November 28, 2017

Citadel's Ken Griffin: Valuations Stretched But "Very Constructive" Environment For Stocks

Citadel's founder Ken Griffin made a rare appearance on CNBC.  Citadel started with $4.7 million in 1990 and now manages over $27 billion.  In the interview, he talked about his market views.  He noted, "Valuations are stretched.  We're not in the sort of classic mania that you get at the very end of a bull market."

Using a baseball analogy, Griffin said we're in the 7th inning (out of the usual 9) of this market rally.  That said, he still seemed to believe that there was a "very constructive" environment for stocks given interest rates are still low, there's low inflation, and companies are seeing ok sales growth.

And while the government has been working on a tax cut plan, Griffin noted this sort of reform would be typically reserved for a recession.  So he asks if we really need to cut taxes as much as they're proposing.  That said, he still thinks that lowering and simplifying taxes is a win for keeping America competitive.

Griffin said, "To the extent that this represents fiscal stimulus, this is a late in the business cycle move.  It would be contrary to what you would traditionally do from an economics perspective."

He also touched on one area that he thinks has become very speculative:  "Bitcoin has many of the elements of the tulip mania in Holland."  He thinks many people buying don't understand what they're buying and instead are just reading articles about it going up and up, so he wonders about how this bubble might end.  He did think that the blockchain technology could definitely have practical uses going forward though.

The CNBC host said Citadel was up 11.4% for the year through October in its Wellington fund.  Griffin attributed this to "good old fashioned stockpicking."  He says their entire strategy is finding which companies are outperforming expectations and which are underperforming.  

Embedded below is the video of Griffin's interview

Citadel founder and CEO Ken Griffin on seeking out talent with exceptional problem solving skills from CNBC.

You can also read the transcript of the interview here.

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