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Markets will take 6-12 months to recover from the pandemic trauma: Sam Zell

‘It is unrealistic to assume that we will have a V-shaped recovery’

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Last Updated: Jun 05, 2020, 01.44 PM IST
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Will pandemic only be a short-term disruption? Billionaire Sam Zell explains
Will pandemic only be a short-term disruption? Billionaire Sam Zell explains
By Nikunj Dalmia

I do not think they can continue to rise at the level that they are rising, says the Founder & Chairman of Equity Group Investments.

There are a lot of moving parts; the medical crisis, economic crisis and social crisis. What is your view of the world right now?
It is hard to answer your question. Frankly, if I knew the answer I could take advantage of it. We are confronting a lot of problems in a lot of places all at the same time. None of them are threatening in nature and the response to the pandemic worldwide has been responsible and relatively reasonable with just a few exceptions. Overall the solution to the pandemic has been isolation and the world has been isolated for quite some time.

The problems that we are seeing on the streets of the United States today are as much a response to the ultimate issue of equality as it is to people being locked up for a long period of time. It is unrealistic to assume that we are going to have a V-shaped recovery. I think at best we might have a U-shaped recovery. But I really believe that there has not been a radical change in conditions and although we will have a short-term employment issue, by the end of the year we will be back to more reasonable levels of unemployment; not tight labour market that we had prior to the pandemic but certainly a level of unemployment that we would be able to handle and we will get better as time goes forward.

You have made a fortune by understanding the market cycles. What is the market cycle we are in? Do you think globally, especially the United States and even emerging markets like India are disconnected with reality?
If given a choice, there is a tendency to try and make markets reflect how we feel. The reality is that markets act independently. Obviously, despite the pandemic and social unrest, the US stock market has recovered almost completely from what occurred when the pandemic began. I think people are viewing these events as short-term dislocations rather than major changes. Markets are unlikely to settle. I do not think they can continue to rise at the level that they are rising but I also do not think we are going to see a depression. However, it is going to take six months to a year before we recover from the trauma of sheltering in place and dealing with the pandemic that the whole world has been dealing with at the same time.

Of late you have been saying that you are worried. Why is the optimistic in you currently not feeling like a kid in a candy store?
Ever since the pandemic occurred, I have received numerous phone calls. People are calling me and saying you are the guy who historically has taken advantage of cycles and taken advantage of overall pessimism. I am more than willing to be the great answer again. What I do not see is the opportunities to do so. I do not think people or institutions are responding very rapidly but instead slowly. They are kind of digesting what is going on to the extent that there will be opportunities but I suspect there will be. I think we will see them come forward in a much slower fashion than perhaps what we have seen in the past.

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