Billionaire investor Sam Zell: The Environment Is Tough, Confidence Is Low. Dow Should Be at 9,000. Market Is ‘Artificial’ as US Nears Recession

Thursday, October 4, 2012
By Paul Martin

Investmentwatchblog.com
October 2nd, 2012

‘We’re Heading for Recession,’ Says Sam Zell

CNBC: A compounding lack of confidence in the future has kept American companies from investing in their businesses and is leading the country back into recession, real estate mogul Sam Zell told CNBC.

Sam ZellThe CEO of Equity Group Investments, which holds multiple publicly traded companies primarily in the real estate space, said a lack of leadership in Washington is keeping the $2 trillion or so of cash on company balance sheets on the sidelines.

That’s happening even as the Federal Reserve continues pumping liquidity, which Zell said is being used only to prop up the stock market.

“Nobody wants to make commitments beyond tomorrow,” Zell said during a”Squawk Box” interview. “One of these (recession) triggers is when enterprise projects start getting delayed. We’re heading for a recession and that’s exactly what you’re looking at now. You’re looking at capital expenditures across the board being deferred for a reason: There’s no confidence.”

Sam Zell: Dow Should Be at 9,000, Market Is ‘Artificial’

“Based on the fiscal cliff and all of the headwinds, the stock market should be at 9,000 and not 14,000,” Zell said.

Nevertheless, a combination of Fed stimulus and widespread business uncertainty has investors chasing a limited number of stocks, thus sending the Dow higher than where it should be.

“We are beginning to see the excess flow of capital; we’re seeing too much capital chasing too few opportunities,” Zell noted. “We’re creating artificial numbers.

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