Is the US stock market turning into a "casino"? Ackman warns that high-leverage speculation is exacerbating market volatility; he is bullish on Visa (V.US), Mastercard (MA.US), and Netflix (NFLX.US)

Billionaire investor and Pershing Square Capital Management founder Bill Ackman has warned that as high-leverage trading and speculative activity become increasingly prevalent, the US stock market is experiencing more and more irrational price volatility and even risks turning back into a "casino." However, he also noted that this market imbalance creates opportunities for long-term investors to buy high-quality companies at low prices. In an interview on Tuesday, Ackman said the current functioning of the stock market worries him. "Every once in a while, I think something is wrong with the market," Ackman said. "Some stocks are trading at prices that seem completely irrational to me. Yes, if you're a long-term investor and can buy stocks at absurdly low prices, that's certainly a good thing. But I don't think it's good for the country overall." He further noted that as market leverage rises, the stock market is once again showing speculative characteristics similar to a casino. "We're back to that casino-like market with leverage as high as 95%," Ackman said. "I don't think this is good for the economy or society, and this phenomenon is causing severe stock price volatility." Ackman is particularly concerned that the rise of single-day leveraged investment products, perpetual futures, and sports betting is encouraging more and more investors to participate in financial markets with a short-term speculative mindset. He believes that when investors view the stock market as a tool for getting rich quickly rather than a place for long-term investment, excessive use of leverage could have serious consequences. In recent years, leveraged investment tools and high-risk trading products have become increasingly popular, allowing investors to build larger market exposure with less principal. However, such trading can also amplify market volatility, especially when investors close positions in a concentrated manner or market sentiment suddenly reverses, leading to sharp price changes that are inconsistent with company fundamentals. Despite his concerns about the speculative atmosphere in the market, Ackman acknowledged that such short-term sentiment-driven stock price volatility has actually created many investment opportunities for Pershing Square. He said Pershing Square has taken advantage of selloffs in the shares of several large technology companies to establish positions at attractive prices. For example, earlier this year, during a large-scale selloff in software stocks amid market concerns that artificial intelligence (AI) could disrupt the traditional software-as-a-service (SaaS) business model, Pershing Square bought shares of Microsoft Corporation (MSFT.US). In addition, after US President Trump's tariff policies led to a decline in Amazon.com, Inc. (AMZN.US) shares, Pershing Square also took the opportunity to buy the company's stock. Ackman also mentioned that after the launch of ChatGPT, the market briefly worried that generative AI would hit Alphabet Inc. Class C's search business, causing significant volatility in Alphabet (GOOGL.US) shares. Pershing Square also used this opportunity to establish an investment position in Alphabet. These investments reflect Ackman's consistent investment strategy of seeking high-quality companies with strong competitive advantages and long-term growth potential and buying when the market sells off sharply due to short-term concerns. However, Ackman emphasized that while irrational market volatility benefits long-term investment institutions like Pershing Square, it does not mean such a market environment should be encouraged. "Over the long term, this is good for us, and by 'us' I mean Pershing Square," Ackman said. "But I don't think it's good for the country as a whole." When discussing his current favored investment targets, Ackman specifically mentioned global payment giants Visa (V.US) and Mastercard (MA.US). He called these two companies among the best in the world, showing his recognition of the payment industry's business model and long-term competitive advantages. In addition, Ackman is also bullish on streaming platform Netflix (NFLX.US). In August this year, he disclosed that Pershing Square had re-established an investment position in Netflix. Ackman had previously invested in Netflix but exited in 2022 due to slowing user growth. This renewed purchase indicates that he has once again turned optimistic about Netflix's competitive position in the global streaming market and its long-term development prospects.