Key Takeaways
- • Bill Ackman, chairman of Pershing Square Capital Management, told CNBC on November 3 (local time) that the U.S. stock market has become a casino driven by excessive speculation and leverage.
- • Ackman said the market has "broken down every few days" and that stocks are trading at prices he does not understand, citing extreme price volatility.
- • Ackman identified leverage reaching 95% as a key problem, arguing it is pulling the market back toward casino-like behavior and driving large price swings.
- • He warned that leveraged products and perpetual futures without maturities, which amplify daily returns, are shifting the market toward short-term speculators rather than corporate fundamentals.
- • Ackman drew a parallel to the sports betting craze, cautioning that pursuit of outsized short-term returns could seriously damage investors.
Summary
Bill Ackman, a billionaire investor on Wall Street, has sharply criticized the current level of speculation and leverage in U.S. equities, saying the stock market has effectively turned into a casino. According to a report from Korean outlet Maeil Business Newspaper (매일경제), the criticism was rooted in repeated surges in stock prices that bear no relation to underlying company value, an dynamic he argues undermines the soundness of the market.
Ackman, chairman of Pershing Square Capital Management, made the remarks on CNBC on November 3 (local time). He pointed to extreme price volatility, saying, "I feel like the market has broken down every few days," and added, "Stocks are trading at a price that I don't understand." While he acknowledged that long-term investors would benefit from being able to buy at very low prices, he argued that such conditions are not desirable for the economy as a whole.
Ackman singled out excessive leverage as a central concern, stating that the market is returning to casino-like conditions when leverage reaches 95%. He said this dynamic is not helpful to the economy or society and is contributing to large swings in stock prices.
He was also concerned about the growing popularity of speculative vehicles designed to generate outsized gains over short periods, including leveraged investment products and perpetual futures contracts with no maturity, which amplify daily returns. In his view, this shifts the market's focus toward short-term traders seeking quick gains rather than corporate value. Citing the sports betting craze, Ackman warned that this pursuit of large short-term returns could seriously harm investors.
Ackman, chairman of Pershing Square Capital Management, made the remarks on CNBC on November 3 (local time). He pointed to extreme price volatility, saying, "I feel like the market has broken down every few days," and added, "Stocks are trading at a price that I don't understand." While he acknowledged that long-term investors would benefit from being able to buy at very low prices, he argued that such conditions are not desirable for the economy as a whole.
Ackman singled out excessive leverage as a central concern, stating that the market is returning to casino-like conditions when leverage reaches 95%. He said this dynamic is not helpful to the economy or society and is contributing to large swings in stock prices.
He was also concerned about the growing popularity of speculative vehicles designed to generate outsized gains over short periods, including leveraged investment products and perpetual futures contracts with no maturity, which amplify daily returns. In his view, this shifts the market's focus toward short-term traders seeking quick gains rather than corporate value. Citing the sports betting craze, Ackman warned that this pursuit of large short-term returns could seriously harm investors.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.