Leon Cooperman in CNBC’s “Mid-Term Report”.

Scott Mlyn | CNBC

Billionaire investor Leon Cooperman said Tuesday that stock selection was key to superior returns going forward as the overall market stagnated after a historic rebound from the pandemic.

“In terms of my long-term outlook, stocks are the best place to be honest, but I just wouldn’t expect much from the big averages,” Cooperman said at CNBC’s Financial Advisor Summit. “I am ready to be in such an environment that I have to choose my path to success.”

The chairman of the Omega Family Office is still heavily invested in stocks and believes the Federal Reserve’s view of inflation will help the market. The S&P 500 is up more than 14% in 2021 and hit another record high on Tuesday.

“The cyclical forces that determine the market outlook are generally positively positioned and that is why I am heavily invested,” said Cooperman. “We have a central bank that wants more inflation. Until that changes, I think the market is in good shape.”

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Despite the recent hot inflation data, the Fed holds its view that any spike in price pressures will be temporary as the economy recovers from the recession. A key inflation indicator the central bank uses to set its monetary policy rose 3.4% year over year in May, the fastest increase since the early 1990s.

Cooperman argued that companies can defend their profit margins by passing inflation on to consumers through price increases.

“Everyone is worried about inflation. Inflation is positive for common stocks because inflation of the cost of businesses infiltrates selling prices, which raise nominal income and profit levels to curb inflation, “Cooperman said.

The investor said he was monitoring the dollar very closely, along with signals from the Federal Reserve and general economic performance, to gauge whether he would like a foot outside.

In terms of individual stocks, Cooperman announced that one of its largest holdings is fintech company Fiserv, which it believes has an attractive valuation. He said he also owns Chinese internet companies Baidu and Alibaba.