Key Takeaways
- • Bill Ackman told CNBC's "Squawk Box" on Tuesday that the stock market is "broken," arguing that speculation and high leverage are driving violent price moves that he believes are not good for the broader economy.
- • Ackman cited one-day leveraged products, perpetual futures, and sports wagering as fueling a get-rich-quick attitude toward markets, and warned the trend could end badly for investors.
- • Pershing Square Capital Management has used market dislocations to buy Microsoft during the "SaaSpocalypse," Amazon after tariffs announced by President Donald Trump, and Alphabet after the launch of ChatGPT.
- • Ackman said he is especially bullish on Visa and Mastercard, calling them among the world's "greatest" businesses, and said Pershing disclosed a Netflix stake in August.
Summary
Bill Ackman, founder of Pershing Square Capital Management, said on CNBC's "Squawk Box" on Tuesday that stock markets have become unstable and that speculation and leverage are behind abrupt price swings. "Every number of days, I feel like markets are broken," he said. "Stocks trade at prices that make no sense to me. Yes, it's good if you're a long-term investor and you can buy at a stupid price. I don't think it's good for the country generally." He compared current conditions to "casino-type markets when there was 95% leverage," adding that such conditions are not inherently good for the economy or society.
Ackman pointed to one-day leveraged products, perpetual futures, and sports wagering as encouraging investors to treat markets as a fast-cash game. He warned this could have dire results, while acknowledging that the resulting volatility creates opportunities for his fund even though it is unhealthy for the broader economy.
Ackman said dislocations have allowed Pershing Square to buy high-quality businesses at discounted prices. He cited Microsoft when it was hit during the "SaaSpocalypse" earlier this year, Amazon after it fell following tariffs announced by President Donald Trump, and Alphabet after shares moved "massively" following the launch of ChatGPT. He said he is especially bullish on Visa and Mastercard, and referenced Netflix, in which he said Pershing disclosed a position in August.
The remarks underscore Ackman's view that volatility rewards long-term investors who can buy during dislocations, but that investors should distinguish speculation from durable business quality.
Ackman pointed to one-day leveraged products, perpetual futures, and sports wagering as encouraging investors to treat markets as a fast-cash game. He warned this could have dire results, while acknowledging that the resulting volatility creates opportunities for his fund even though it is unhealthy for the broader economy.
Ackman said dislocations have allowed Pershing Square to buy high-quality businesses at discounted prices. He cited Microsoft when it was hit during the "SaaSpocalypse" earlier this year, Amazon after it fell following tariffs announced by President Donald Trump, and Alphabet after shares moved "massively" following the launch of ChatGPT. He said he is especially bullish on Visa and Mastercard, and referenced Netflix, in which he said Pershing disclosed a position in August.
The remarks underscore Ackman's view that volatility rewards long-term investors who can buy during dislocations, but that investors should distinguish speculation from durable business quality.
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