Straight-talking billionaire investor, Sam Zell talks about investing in his latest zoom interview.
Sam Zell is the Chairman and Founder of Equity Group Investments; he is known for his real estate deals. His mega win came in 2007 with the sale of the REIT he built, Equity Office Properties, for $39 billion, at the top of the market.
But in the world of investing, you win some, you lose some. Sam Zell’s $8.2 billion LBO of newspaper conglomerate Tribune Co ended up being a money pit, which went bankrupt a year later.
“Sam Zell’s $8.2 billion LBO of newspaper conglomerate Tribune Co ended up being a money pit, which went bankrupt a year later”
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Sam Zell talks about investing in these extraordinary times, he is also a keen follower of megatrends
Sam Zell doesn’t believe radical change will come with President-elect Biden.
“The election was not a blue wave, and I assume the Republicans will keep control of the senate. So, I don’t see any radical policy change. All of the stuff that was discussed during the Democratic primaries will go back to the left where it belongs. And I think Joe Biden is likely to run, for sure a left-of-center, but a center administration” explained Sam Zell.
“I think Donald Trump did the country a great favor. He didn’t drain the swamp, but he certainly upset the swamp, and I think the net result of all that is going to be very positive for maintaining a centralized country” added Sam Zell.
“I think Donald Trump did the country a great favor. He didn’t drain the swamp, but he certainly upset the swamp”
The real estate mogul Sam Zell talks about investing in the context of a low-interest-rate environment
As expected, Sam Zell is an advocate of low-interest rates.
“The challenge of the next few years is to keep interest rates as low as possible. I think the risks of inflation are much higher than the risks of deflation,” added Sam Zell.
“Rates have to stay low because we can’t afford to pay back at a higher rate than we’re dealing with today. This slows the whole economy. Very low-interest rates result in deferral of decision making” he said.
“The only risk you’re taking is the opportunity cost of having that money put away for two years” – Sam Zell (about SPAC)
Sam Zell talks about investing in the high-risk but potentially profitable Special Purpose Acquisition Company (SPAC), which is currently a mega craze on Wall Street
SPAC is a company created solely to merge or acquire another business and take it public. It is a cheaper and faster alternative than an IPO.
“The only risk you’re taking is the opportunity cost of having that money put away for two years and you can’t get it. And you could sell your stock. You have a choice. Say yes, say no, take your money back. It’s a fabulous deal for an investor” said Sam Zell about SPAC.
“We’re interested in industrial space, manufacturing, and distribution. SPACs have so far focused on electric trucks and space ship travel and those kinds of things that can’t be measured” added Sam Zell.
It is in real estate where Sam Zell talks about investing, which is at odds with what many see as the “end of urbanization”
Sam Zell, an investor in commercial real estate, doesn’t believe that end of urbanization is a megatrend.
“It’s not going to happen. We’re social animals. I’m happy to be very clear that I think people are looking at this current lockdown and extrapolating preposterous results” said Sam Zell in his zoom interview.
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