Bill Ackman warns of casino-like markets fueled by leverage

What Ackman said on air

"Every number of days, I feel like markets are broken," Bill Ackman told CNBC's "Squawk Box" on Tuesday. "Stocks trade at prices that make no sense to me. Yes, it's good if you're a long-term investor and you can buy at a stupid price. I don't think it's good for the country generally."

"We're back to the casino-type markets when there was 95% leverage," he added. "I don't think that's inherently good for the economy, for society, and it's leading to these massive moves in stocks."

What worries him and why it matters

Ackman argued that the growing prevalence of one-day leveraged products, perpetual futures, and sports betting is encouraging people to view markets as a fast-cash game, and he warned that this could have dire results. He noted that while these swings create opportunity for his fund, they are not healthy for the broader economy.

Where Pershing is finding value

Ackman, founder of Pershing Square Capital Management, said dislocations have let the fund buy big bargains. He cited Microsoft when it was hit during the "SaaSpocalypse" earlier this year, Amazon after it fell following tariffs announced by President Donald Trump, and Alphabet after shares moved "massively" following the launch of ChatGPT.

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The investor takeaway

He said he is especially bullish on Visa and Mastercard, calling them among the world's "greatest" businesses. He also referenced the streaming service Netflix, and said he disclosed a position in August. The bottom line: if volatility is back, understand what you own and why - and know which moves are speculation versus durable business quality.

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