'Big Short' investor Steve Eisman rings the alarm on the tech-stock rally and slams bitcoin as pointless in a new interview. Here are the 10 best quotes.
The rally in tech stocks this year could prove short-lived, Steve Eisman warned.
The "Big Short" investor sees growth stocks underperforming if the Fed doesn't cut interest rates.
Eisman said higher unemployment could hit the housing market, and dismissed bitcoin as pointless.
The surge in technology stocks this year might not last long, Steve Eisman warned in a recent episode of Bloomberg's "Odd Lots" podcast. He also cautioned a spike in unemployment could spark a flurry of home sales, ruled out another financial crisis, and panned bitcoin and other cryptocurrencies as pointless.
Eisman, a managing director of Neuberger Berman, is best known for predicting and profiting from the collapse of the mid-2000s housing bubble. He was portrayed by Steve Carell in the movie adaptation of "The Big Short."
Here are Eisman's 10 best quotes from the interview, lightly edited for length and clarity:
1. "Maybe this is the last hurrah right now for growth stocks. It will all depend pretty much on the Fed." (Eisman predicts the Federal Reserve will keep interest rates elevated, pulling down the valuations of tech stocks.)
2. "Housing hasn't collapsed in the United States, but it's kind of locked and housing prices have gone down. So A), it's hard to sell and B), you're selling for less. Now, as long as people are employed, they're not going to sell their home down 40%. They'll just live in their home." (He explained that a sharp rise in mortgage rates has depressed demand for new houses and made homeowners balk at picking up sticks.)
3. "The consumer is still in pretty good shape. As long as everybody's got a job, people will pay off their debts. If unemployment goes up, you'll see an increase in delinquencies and losses, but it's not going to be a calamity. It's just going to be what I'd call a normalization."
4. "Something bad could happen, we could have a recession. But my feeling is we'll have an old-fashioned, run-of-the-mill recession. We're not going to have some enormous meltdown crisis where the system is completely at risk, which is what happened in 2008."
5. "I can't say that there won't be breakage anywhere. There always could be breakage. What I would say definitively is that there will not be breakage in the US financial system, especially in the banks." (Eisman explained that regulators have sharply reduced banks' leverage and reined in their risktaking since the financial crisis.)
6. "When you're levered 40-to-one, to destroy the bank, you need a pebble. But when the bank is levered 10-to-one, you need a meteor. Now we could have worse credit in the United States, and the banks would earn less. But other than a couple of banks, not one bank in the United States will lose money."
7. "Oh my God. It's ridiculously hard. The whole world is telling you that you're an idiot, and then sometimes you think you're an idiot." (Eisman was underscoring the difficulty of holding a negative view on the mid-2000s housing market before it ultimately crashed.)
8. "I call this the Amazon disease. When Amazon came public, there was a lot of skepticism that this wouldn't work, and Amazon has basically conquered the world. So people are always looking for the next Amazon." (Eisman was discussing the immense hype around some growth stocks, and how some analysts and investors focus too much on the size of companies' total addressable market, and too little on whether their business models work.)
9. "It's very hard to short fiat currency because they all trade relative to one another. If you short the dollar, your problem is that in a basketball team where everybody is 5 feet 4 inches, the dollar is 5 feet 11 inches."
10. "Bitcoin is up a lot this year along with everything else speculative. You can't have a currency that moves 25% every six months. That's not a currency. That's a speculation. (Eisman said he doesn't understand what problem bitcoin solves, or why people other than speculators own it.)
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