Tuesday, October 2, 2012
Sam Zell: Stock Market 4,000 Too High
Billionaire Sam Zell, who mad his fortune in real estate, says the stock market it over 4,000 points above what it should be if not for the artificial stimulus which pushed up the price of stocks far beyond their real values.
According to Zell, if quantitative easing were removed from the economic situation, the index would plunge by over 4,000 points to land at about 9,000, based upon economic and corporate fundamentals.
"Based on the fiscal cliff and all of the headwinds, the stock market should be at 9,000 and not 14,000," Zell concluded.
The fiscal cliff refers to the combination of Republican President George Bush's tax breaks expiring while at the same time public spending is cut.
Uncertainty surrounding taxes are a major part of the reason businesses of all sizes aren't expanding, as is the renegade Democratic party and Obama, who continue to boost regulations at the expense of doing business in the country.
Combined, this weighs heavily on the present and future business climate in the United States, and businesses must base their decisions on the most accurate picture of the future they can see, using the most up-to-date data.
These ancillary issues cloud the economic picture enough to make it possible to fairly accurately see the future in any way. That is why the businesses, for the most part, aren't hiring or expanding, and why they won't until the interference from the government, as well as tax situation is resolved.
If Obama is re-elected says Zell, it'll make it harder to implement healthy economic reforms which would have a positive impact on the economy. He's right.
Zell concluded, "You're looking at capital expenditures across the board being deferred, and they are being deferred for a very good reason. They have no confidence."