NEW YORK Steven Einhorn, vice chairman of hedge fund Omega Advisors Inc, said Thursday that the bull market in U.S. equities was not over and predicted the Standard & Poor's 500 Index will rise another 3-5 percent by year-end.
In an interview with Reuters, Einhorn, a top executive at Leon Cooperman's $10.5 billion hedge fund Omega, said Federal Reserve chair Janet Yellen on Wednesday made clear that the U.S. central bank will keep monetary policy "easy for an extended period of time" which is supportive of stock prices.
"I don't think this bull market is over," Einhorn said. "I think there is still a good deal of time and price left in it, though I would say that given the advance we have made year-to-date, that the upside between now and year-end is respectable but not anything other than respectable."
The benchmark S&P 500 jumped 30 percent in 2013, ending the year at an all-time high for the first time since 1999. So far this year, the S&P is up 5.8 percent.
Einhorn said the Fed as well as the business cycle are the main factors that give him confidence that the bull market in U.S. stocks has not ended. "I think this business cycle expansion we started in the middle of 2009, which is now about 62 months old, should extend for another 3 years or longer and if that's the case, it is simply too early in this business expansion for shares to peak."
Einhorn added: "The market tends to peak roughly 6-8 months prior to a peak in economic activity, so if I'm correct that this particular economic expansion has years to go, then this bull market should have a good deal of time and price left in it."
As for Yellen, Einhorn said "The Fed has made it clear – certainly reinforced yesterday by Janet Yellen and the FOMC – that they will keep policy easy for an extended period of time, that is keep the feds funds rate at or close to zero through at least the middle to latter part of next year."
Einhorn joined Omega in 1999, after previously overseeing global investment research and co-chairing the investment policy committee at Goldman Sachs & Co. He is unrelated to David Einhorn, who runs hedge fund firm Greenlight Capital LP.
(Reporting By Jennifer Ablan; Editing by Chizu Nomiyama)