Hedge fund manager Bill Fleckenstein has decided to start another short-only fund early next year, citing “really stupid valuations,” reports Juliet Chung for The Wall Street Journal. Fleckenstein shut down his profitable short-only fund in 2009, but now he wants to build up $200 million so that he has money on hand as opportunities present themselves.

Bill Fleckenstein

Bill Fleckenstein on stock bubble

“I want to wait until I can have it be more like shooting fish in a barrel, which doesn’t happen very often–but it happens,” said Fleckenstein. “It happened in early 2000 after the stock bubble burst, it happened in ’07, and it’ll happen again.”

Fleckenstein shuttered his short-only fund after 12 years because the crisis had taken the wind out of everyone’s sails, and it was no longer easy to find companies riding high on sentiment alone. The last year has been hard on long/short funds, so much so that some have switched to long only. There are plenty of bears who think that a bubble is forming and that the market must eventually come back down, but predicting when the correction will come is another matter entirely.

It sounds like Fleckenstein isn’t himself ready to make any hard predictions, and if he has any specific ideas on who to short he is keeping them to himself, but he knows that tougher monetary conditions are coming once tapering sets in. Lots of investors are ignoring the impact that QE has had on the market over the last year, and at least some firms that look good now will struggle when rates go up.

Business valuations

“We’re now starting to see really stupid valuations on businesses that may or may not really be businesses,” said Fleckenstein, “and people are forgetting the fact that the lower cost of money has powered segments of the economy that has given us an appearance of things being better than they are.”

Of course he’s talking partly about Twitter, Inc. (NYSE:TWTR), whose IPO is the buzz of the season despite the fact that it continues to lose money, but he may also be referencing Facebook Inc (NASDAQ:FB)’s meteoric rise or even companies like Tesla Motors Inc (NASDAQ:TSLA) that have beaten expectations all year but can’t claim to have a deeply established business model.