Key Takeaways
- • Bill Ackman, chairman of Pershing Square Capital, said on CNBC on November 3 that the stock market is "broken" and has returned to a "casino-like" market, with leverage comparable to levels he cited as reaching 95%.
- • Ackman said stocks are trading at prices he "can't understand," warning that speculative leveraged products, perpetual futures, and sports betting pose risks to short-term investors seeking quick gains.
- • Ackman acknowledged that volatility could offer long-term investors chances to buy at lower prices, but said the environment is not good for the country as a whole.
- • Elliott Investment Management, in an October letter to investors reported by the Wall Street Journal on November 2, said "nearly every alarm signaling the arrival of a bear market" is going off and compared conditions to the "Roaring Twenties."
- • Elliott warned of circular AI investments, debt-fueled capital expenditures, and anti-AI sentiment, and said a shock could be as severe as any bear market in recent decades.
Summary
Bill Ackman, the billionaire hedge fund manager and chairman of Pershing Square Capital, criticized excessive speculation and leverage in U.S. equity markets in comments made on CNBC on November 3 (local time). According to the source article, Ackman said, "Every few days, I feel that the market is broken," adding that "stocks are trading at prices I can't understand." He argued that the market has returned to a casino-like state, comparing it to a period when leverage reached as high as 95%, and said this is "inherently bad for the economy and society" while driving stock prices sharply higher.
Ackman said that while the volatility could present buying opportunities for long-term investors, it poses meaningful risks to those seeking rapid gains through short-term leveraged products, perpetual futures, and sports betting, and could ultimately lead to disastrous consequences. He noted that buying at absurd prices may benefit long-term investors but is not good for the country as a whole.
The warnings echo a recent caution from Elliott Investment Management. According to The Wall Street Journal and other outlets on November 2, Elliott wrote in an October investor letter that "nearly every alarm signaling the arrival of a bear market is going off in the current stock market," comparing conditions to the Roaring Twenties preceding the Great Depression. Elliott described the shift from fear of missing out (FOMO) to fear of getting obliterated (FOGO), warning that the upward momentum could reverse quickly if one or two drivers of the rally were disrupted.
Elliott cited circular investments between AI model developers and infrastructure manufacturers, debt-fueled capital expenditures, and growing anti-AI sentiment as key risks. It warned that if investors begin to question AI pricing or infrastructure buildout expectations falter, the resulting shock could reach historic levels comparable to any bear market in recent decades.
Ackman said that while the volatility could present buying opportunities for long-term investors, it poses meaningful risks to those seeking rapid gains through short-term leveraged products, perpetual futures, and sports betting, and could ultimately lead to disastrous consequences. He noted that buying at absurd prices may benefit long-term investors but is not good for the country as a whole.
The warnings echo a recent caution from Elliott Investment Management. According to The Wall Street Journal and other outlets on November 2, Elliott wrote in an October investor letter that "nearly every alarm signaling the arrival of a bear market is going off in the current stock market," comparing conditions to the Roaring Twenties preceding the Great Depression. Elliott described the shift from fear of missing out (FOMO) to fear of getting obliterated (FOGO), warning that the upward momentum could reverse quickly if one or two drivers of the rally were disrupted.
Elliott cited circular investments between AI model developers and infrastructure manufacturers, debt-fueled capital expenditures, and growing anti-AI sentiment as key risks. It warned that if investors begin to question AI pricing or infrastructure buildout expectations falter, the resulting shock could reach historic levels comparable to any bear market in recent decades.
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