what’s unusual about the current cycle is you ought not have an $800 billion deficit in the fourth year of an economic expansion and interest rates ought not be zero. approximating zero. i’m trying to normalize. and what’s normal? to me, the market ought to sell somewhere between 15 to 16 times earnings, normal. and then earnings normalize at probably 100, maybe better. i really think it’s something between 1500 and 1650 on the s&p is fair value and that’s where we are. also, i think that the pace of — i’ve said this before on the program, but i think all of us have to take a message from 1.7% 10-year governments and zero short rates. well, here we are. profits this year are going to be up about 4%. the market’s already up 15. last year, profits were up 6 and the market was up i think 14 to 15. so, you know, i think that the market is somewhat ahead of the fundamentals. but by and large, the notion of a big decline, i just don’t think makes sense. guys? i’d love to ask him a question about new money coming into the market, mr. cooperman. so for instance — call me lee, call me lee. lee, pleasure. thanks for being here again because i love your insight. when you have investments which, you know, 20 billion, 30 billion you guys have in the markets, if you all a sudden got a new chunk of money, fresh money, right now, today, where would you put it in? i know what you’ve already got on your sheets. what would you buy today with new money? i would add to what i already have that i thought wastill undervalued. and we find no shortage of cheap stocks. i guess — this is small caps, i want to point this out. one recent edition to that portfolio was monetize. which is highly unusual for us. it’s about as small as we go. this is the mobile wallet. they have an application to put on mobile phones to enable you to do your banking. you want to pay your mortgage, move money, pay your bills. they’ve been blessed byvisa. visa, outright ownership and options. ability to own about 20% of the company. strong balance sheet. 175 million cash. no debt. any have 20 million people today that pay them $5 a year for the software on their iphone or mobile phone. that’s $100 million revenues. we think they’ll have 100 million subscribers within four years. is this a new position for you — this is the first time you’re talking about this company monetize — well, j bought something called technique, engineering and construction firm. have a quasimonopoly position in the l & g or off to a platform business. we think over the next three or four years will go 20% a year. l & g will be a growth business. we have a lot of things we think are cheap. aig, net life, citicorp and the financials. i guess, you have to understand what i do to answer your question. we’re value investors. it is first place we start. what is the s&p? if you bought the s&p what would you get? an index of companies growing 5% of year that yields about 2%, sells a bit over two times book value, has 35% debt in their capital structure. and for those statistics, you’re paying about 15 times earnings. we’re looking for companies who are growing in line or more than the market or yield more than the market or sell at a much wer asset value. you can find plenty of attractive ideas. the citicorp and the aig and the metlife, they’re all selling below book value. much was made of your position last year in apple. the fact that you’ve got out of it and you’re in qualcomm and facebook. are you tempted at these levels if you’re a value investor? is apple now a value stock? would you get back in at these levels? we did get back in the low 400s. but very small. i had a great trade actually. it wasn’t my idea but a friend of mine gave it to me. this is up your guy’s alley. but about two weeks ago, i bought a january 400 call. so the january 46 o call. and i sell the january 325 put, zero. nice. no cost. took out about $30 just two days ago. we love you for that — we didn’t do enough size unfortunately. that’s a theme we’ve seen from big investors out there. icon, obviously, mr. cooperman here, lee. real quickly, i’m curious, though, when we look at the portfolio of stocks that you’ve got right now, the one missing thing that — the one piece that seems to be missing versus what we’ve been hearing at least yesterday and through a lot of the seminar has been about the housing market. you don’t have a whole lot of exposure in housing itself or even some of the derivatives. we’ve missed the area to be perfectly blunt. and we have it through derivatives. we own solutions that helps the banks in foreclosing real estate. we own jpmorgan. we own citicorp. we have derivatives. we missed the lenars of the world and that was a miss. if i recall, it was a pick from brad berning on our show yesterday and i also heard that it was a pick out at — i don’t thing — i don’t know if it’s a love stock — well, three smart guys
talking about it in the last 24 hours. we’ve owned it since the teens. it’s i think 35, 36. i’ve been traveling the last few days. it’s okay. i’m not in love with anything these days other than my wife and my grandchild and my kids. you said you were using options. what are your broad thoughts on what apple’s doing now? i’m not the expert. i’m much more low tech — the dividend, buyback and everything else? i think their financial policies up until recently have been destructive. sitting on 100-plus cash in a zero interest rate environment. but they’ve modified it now. a bit of credit for helping move them in the right direction. he’s a smart fellow. i sold the apple near 650 or so because i did not see anything down the pipe that could remotely approach t iphone 5 in importance. i also basically recognize that they were getting a premium pricing from the tellcos for their product. even though i have an iphoned an an ipad. thistrillion market cap et cetera at the time was to move away. he was a bond guy, as you’ll have jeff on, you can ask him. we didn’t short it, we just sold it. he shorted it. one of the great et calls in recent memories. from a fixed income guy — absolutely. he’s going to be up later. we’ll talk to him more. we’ve already covered so much, lee. you’ve given two new position picks. you’ve talked about apple. let’s get one more. and that’s facebook. why are you in facebook? john, my partner, has done a wonderful job, got me into sprint at two. we still like that, by the way. give a little commercial for sprint. we’ll talk about that, absolutely. we think that people are underestimating the mobility opportunity that exists in facebook. and so we think ultimately they can achieve the market cap comparable to a google which will make a stock very rewarding. a little more speculative, higher multiple than the kind of things we’re normally involved in. havjohn on the program, he can tell you. you’ve got a couple guys here — absolutely, we see the same thing. everybody was critical, talking about they need to do things in mobile and do a better job. i think mr. zuckerberg so far has proven they’ve been able to get that ad revenue everybody wanted. we’re just not seeing it right now reflected in the price of the stock. we think that’s covered. you think you’re going to figure out that the mobility game — start monetizing more? i think the numbers are starting to ramp up. and you have to be, lee, like me, wishing that you were getting the kind of performance out of qualcomm, you know, one of those big support players — i think the market is saying — excuse me for interrupting you — sure. what the market is saying is you’ve got another big year next year and then things slow down. you had enormous cash position. they’ll be probably uyback 5 billion this year. the multiple seems very reasonable. but it’s been disappointing. but i don’t think they have the problems of an apple because they’re more ubiquitous. they seem to need what you were just talking about, that next big it thing. if there was an ipad, an iphone or iamsung comes up with it, that could be what moves the needle for qualcomm. that’s what facebook now is doing, perhaps from the comments from lee cooperman. the stock is getting a lift. we’ve got so much more ahead. we’re just getting start heard from las vegas at salt. let’s go back to headquarters for a market flash with josh lipton. i know you are there in sin city but here in new york at the investor conference yesterday, we had some big names making big picks. david ihorn recommending investors do their own homework. but he does like oil states international, ticker ois. its off shore products are technologically advanced, highly engineered, some are considered must have. ihorn saying that stock in the green today. also t well-known short seller said the business of hard drives is a value trap with companies like western digital and seagate likely coming under the same kind of pressure that has hit pc stocks. a few weeks ago, you asked channos about that very thing. here is what he said. if you look at the hp and dell scenarios, it’s natural to sit back and say what about intel, what about microsoft, disc drive makers? all of the companies that are relying heavily on pcs. yes, yes. why not those? well, i mean, i’m not saying why not those. i think that your viewers should be, you know, sharpening their pens when in this space because clearly the surprises are going to be on the negative side going forward. sharpening their pencils. scott, back to you. and hopefully they wrote down the names seagate and w because that’s what channos talked about yesterday as being good shorts. the one issue i would take with that wholese is seagate has been moving into the flash memory world. they’ve released some products recently. they’re not as tied quite to the pc market as they once were. they see what’s going on in mobile so they’re
