Ackman Warns Speculative Trading Is Turning the Stock Market Into a Casino

Bill Ackman, the founder of Pershing Square Capital, says speculative trading is running rampant and causing wild swings in share prices, and he worries the stock market mechanism has "broken down."

This kind of market volatility has created an opportunity for the hedge fund to buy high-quality companies at a discount, including Microsoft, Amazon, Visa, Mastercard and Netflix.

However, he warns that short-term speculation harms ordinary investors.

Ackman, the chief executive of Pershing Square, appeared on the program "Squawk Box." He said on Tuesday that because leverage is high across the entire financial system and speculative trading is widespread, share prices are swinging sharply, and he fears the stock market has stopped functioning properly.

"Every few days, I feel the market has gone haywire," Ackman said on the program. "Many stocks are trading at prices that seem completely illogical to me. True, for long-term investors, buying at such absurdly low prices is a good thing. But overall, this is not good for the country as a whole."

"The market has returned to a casino-style trading environment where leverage is as high as 95%," he added. "This kind of environment is fundamentally harmful to the economy and society, and it also causes sharp swings in stocks."

The Pershing Square founder said it is precisely this kind of market mispricing that gives the hedge fund bargains. Ackman explained that earlier this year, during the "SaaS industry crash," Pershing Square bought Microsoft; when Trump's tariff policy was introduced and share prices plunged, it positioned itself in Amazon; and after the release of ChatGPT, when Google's share price swung sharply, the fund also stepped in to buy Google.

But the billionaire investor cautioned that with single-day leveraged products and perpetual futures constantly emerging, combined with the spread of sports betting culture, many investors treat the stock market as a shortcut to getting rich quick, which carries enormous risk and could lead to catastrophic consequences. He said: "For us at Pershing Square, it is good in the long term, but I don't think it is good for the country."

Ackman is especially bullish on Visa and Mastercard, calling them among the best businesses in the world; he is also bullish on the streaming platform Netflix (NFLX), and the fund built a position in Netflix again in August.