Taps Coogan – February 11th, 2021

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Sam Zell, real-estate mogul and Chairman of Equity Group Investments, recently spoke with CNBC about the raging mania he sees in financial markets. Known as the ‘Grave Dancer’ due to his knack for getting out of markets before major crashes and back in at the lows, Mr. Zell slams the current market sentiment as a giant game of “I can get out before it falls.”

He adds:

“There is no connection between the pricing of any of these stocks and the underlying company. Yes, there is some protection that comes from the fact that there is a short position that has to cover, but when it’s all said and done, this is just rank speculation…”

“I’m just guessing but if we could send a little mole back to find out where all this stimulus money went, I bet we’d find out an awful lot of that stimulus money ended up being speculated in this casino…”

“15-year old mavens are betting that they can get out before somebody else gets out… I think this is very negative for the stock market. I think this is very negative for the capital raising market… It’s just pure speculation…”

“There is an enormous amount of liquidity in highly speculative scenarios. There is a lot less liquidity in what you and I would call stable businesses. We’ve been making invests in ongoing business that are not predicated on any speculation and those have been terrific businesses… One of the things that I am worried about is that we are going to over stimulus the economy and result in the return of inflation…”

True as all of that may be, neither the Fed nor Congress are going to heed warning signs. They are going to keep pushing the stimulus until something big breaks.

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