Sam Zell effectively rips the marketing wrapper off the investment sales puff in this one simple statement: “What’s the definition of safe? That the stock doesn’t go down.” That is the way real people think about “safe” but it is certainly not what risk markets at today’s record valuations offer.
Sam Zell, Equity Group Investments Chairman, provides perspective on current investing trends, and explains why he thinks a correction is likely. Here is a direct video link.
With stock and corporate bond prices back at cycle peaks, those holding them and thinking their money is anywhere within the realm of “safe” are setting up for a very rude awakening. Particularly those who have retired too early in the past few years or are about to, thinking they are now “conservatively invested” with their savings in stocks and mutual funds in order to live off the dividend income. The next downturn is likely to send many back looking for work to fund their living expenses and build back up their savings. Freedom 75 or 85, maybe?
At least Fed members like Janet Yellen will have a very generous government pension to live on. And they can collect speaking fees in retirement explaining why they tried their best theories and the third devastating asset bubble since 2000 was not anyone’s fault.