market folly

We're posting up notes from Invest For Kids Chicago 2014.  Next up is the fireside chat that Michael Sacks had with Sam Zell of Equity Group Investments.


Sam Zell's Talk at Invest For Kids Chicago

•    Comment on the election (Zell): I don’t know if America is better but there is a God.
•    Zell thinks yesterday was a big day. Big day from a number of different perspectives. (1) if results different, serious risks that the President legislates his way through edicts; (2) creates an opportunity for Obama to compromise and get something done through mutual agreement.
•    Everyone is excited that the stock market is at an all-time high. Experience is that USA can’t do well if Japan/Europe/Russia in trouble.
•    “Best looking gal in the whore house – it’s still a whorehouse” On USA and the rest of the countries
•    America needs growth. Whatever happens, need to refocus on growing company, which will begin to solve the trouble of inequality.
•    Where is Zell finding opportunities today to deploy capital? Some markets outside of the USA which are interesting - #1 country is Colombia. Major benefactor of the free trade agreement. Because of the reduction of FARC, Colombia production of oil increased due to access. Investing significantly in Colombia.
•    Optimistic on India. Difficult environment to operate in, many burned. Modi is doing good things.
 •    Real estate is where it was a couple years back, very attractive from a price point.
•    Always opportunities, look at individual situations. That is what they do.
•    Any common investment principles? They have always been industry agnostic. You get business or you don’t.
•    In the 80’s consolidated rail cars. No one liked it, but loadings where flat and they scrapped 65% of the cars – lots of money was made when those lines crossed.
•    Up until the 80s only did real estate, pivoted to opportunity.
•    When you commoditize trust, you dramatically increase risk.
•    If Zell was in his twenties to thirties what would he do? His response was the generations often thought the older generation had it easier. Zell and Lure’s success tied to the fact they didn’t know what they couldn’t do.
•    Current environment smells a lot like the dotcom boom in regards to valuations. Amazon is one example.
•    On philanthropy, approach from the perspective that anyone can put their name on the building by just giving money. They don’t want to do that. They support topics across colleges such as entrepreneurship and creative writing.
•    Talked energy briefly – noted cost of production in Saudi Arabia is cheaper than the USA and that the market went bananas on US oil for a bit.


Be sure to check out the rest of the hedge fund presentations from Invest For Kids Chicago here.