Tuesday, 01 May 2018 13:00

Billionaire Sam Zell warns on stocks and real estate: ‘Where’s the beef?’

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The Trump administration is delaying those steel tariffs for a bunch of allies, but there isn’t much letup in Iran-Israel tensions[1] at the moment — or in North Korea-related posturing[2].

And the Dominican Republican is snagging a bit of the spotlight today, as it disses Taiwan and cozies up to China[3].

But the market just might shrug at all the geopolitical turmoil and instead focus on what really matters: How many iPhones[4] has Apple sold?

“Given the negative bias to the markets, a downbeat guidance from Apple could prove too much,” warns London Capital Group’s Jasper Lawler, as he braces for the company’s earnings after the close[5].

Billionaire investor Sam Zell is also cautioning that stocks could face a reckoning. And he’s not sounding that bullish about real estate either — the sector where he made his fortune. He delivers our call of the day.

“The stock market, despite all of the gyrations, is still at an all-time high. Real estate is priced to perfection,” Zell tells Bloomberg TV[6], as the S&P 500 SPX, -0.82%[7] stands 8% below its January peak.

“I’m a little bit like that old Wendy’s commercial: ‘Where’s the beef?’ ... I think it’s a very challenging situation, one that requires discipline.”

Zell agrees with the notion that there is a ton of capital chasing too few opportunities. He suggests investors resist urges to buy, buy, buy.

“It very hard to sit there and not pull the trigger, but it’s the guys who don’t pull the trigger who are around to pull it when it works,” Zell says.

The “Grave Dancer” notes that he and his lieutenants swooped down about five years ago on a Chicago-based REIT that owns office properties, Equity Commonwealth EQC, -0.55%[8]  .

“Since we took it over, we’ve done nothing but sell. Today we have $3.2 billion in cash, uncommitted, and we’re just sitting there, waiting for the world to come to us,” he says.

He’s not tempted by the Amazon-fueled action around warehouses and distribution centers[9]. It’s probably “getting too exciting,” he says.

You can get a seven-minute dose of Zell in the video below, and keep in mind the evergreen advice from A Wealth of Common Sense’s Ben Carlson — who says don’t try to emulate billionaire investors[10].

Read more: Trump gets kudos from billionaire Sam Zell[11]

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