Paul Tudor Jones: Why It’s A Very Difficult Time To Be Investing In U.S Stocks

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During his latest interview with CNBC, Paul Tudor Jones says that it is a very difficult time to be an equity investor in US stocks right now. There is a lot of uncertainty, both geopolitical and fiscal. Geopolitical uncertainty can lead to unexpected and non-linear outcomes, which can make it difficult to make sound investment decisions. Fiscal uncertainty is also a problem, as it will require a significant change in political mentality to address. Here’s an excerpt from the interview:

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Paul Tudor Jones
Image source: CNBC Video Screenshot

JONES: I think we’ve become inured to headline risk. If you think about the market’s reaction to what happened over the weekend, it was a linear response, right? It was, it was risk off, but it wasn’t anything that possibly recognizes just how dangerous this could be.

So and I think that’s because we’ve gotten exhausted with, with headline risk. It doesn’t mean that we can’t have a non-linear reaction to markets down the road if something bad happens. So, it doesn’t mean that it means and I think at this point in time we’re just probably incorrectly exhausted by seeing this.

QUICK: This was pretty bad, though. Like, what, when you say something bad happens, what would that have to be? Something that happens domestically?

JONES: Well, I mean, if you think about, again, what happened, where this really gets bad is obviously if Iran and Israel get in direct conflict. That’s when it really gets bad because then you’ve got the ability to have kind of a First World War cascade when everyone gets involved.

Obviously, the big question now is, was Hamas a proxy for Iran, like Hezbollah is, or was it simply an ally? And there’s the, there’s big, different responses that come from which one of those is ultimately determined by Israel.

So, yes, if, from a personal standpoint, would I be investing in risk assets now in stocks until I saw what the resolution was with Israel and Iran? You know Israel’s going to respond in some way, shape, or form. The determination of whether or not Iran was actually responsible is enormous because, again, it has the possibility to really escalate into something terrible.

SORKIN: And so, does that mean you, that you are, we would be, as an investor, risk off in terms of, you just said, would you want to own equities? I mean there’s also the question of what you think is going on in the United States with our economy, with the rest of the world, with what the Federal Reserve is or isn’t going to do.

JONES: It’s a, it’s a really challenging time to want to be an equity investor in U.S. stocks right now. It’s really hard because again you’ve got the geopolitical uncertainty, which we, I think, come to live with to a certain extent. But again, all of those had the ability to, to have a non-linear outcome. So, something not just business as usual. But I think it’s, I think equally as much of a problem is the fiscal situation that we’re facing in the United States, which is going to – which is going to require a completely different political mentality to what—

You can read the entire transcript here:

Paul Tudor Jones – CNBC Transcript – Squawk Box

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Tobias Carlisle is the founder of The Acquirer’s Multiple®. He is also the founder of Acquirers Funds®. The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates.