The bearish billionaires

published 12 September 2014

As the S&P marches on and on, experienced investors are increasingly concerned that it is running out of oxygen. One is Sam Zell, a real-estate billionaire nicknamed the Grave Dancer' for his knack of profiting from distressed assets. He's worried about the gulf between the stock market's performance and the underlying economic fundamentals.

In the latest earnings season, says Zell, firms that disappointed the market mainly did so because their sales fell short of forecasts. That's a reflection of weak demand, which is hardly a hallmark of a thriving recovery with equities at record levels.

Part of the reason stocks are overinflated is that people have nowhere else to put their money amid rock-bottom interest rates. This makes the market look precarious, as the economic and geopolitical backdrop is uncertain."It's very likely that something has to give here," he concludes.

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Meanwhile, George Soros has taken out put options insurance against a decline on an ETF tracking the S&P 500. The position is worth $2.2bn, or 17% of his total assets under management, says Tyler Durden on Zerohedge.com.

And Carl Icahn, the "poster-child of leveraged financial engineering", says he's nervous about US stocks. Then again, concludes Durden, investors should consider the possibility that the bearish billionaires are a contrarian indicator.

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.