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Fashion Learn to invest against the herd if you want to create wealth: Zell


Fashion Trends

Fashion Learn to invest against the herd if you want to create wealth: Zell

We have to create an environment where we can make mistakes and survive, says Founder and Chairman of Equity Group Investments. Would you worry about the shape of the world changing because of this crisis? Globalisation has been a large reason for global growth and now that can get jammed. Is that a worry for…

Fashion Learn to invest against the herd if you want to create wealth: Zell

Fashion

We have to create an environment where we can make mistakes and survive, says Founder and Chairman of Equity Group Investments.

Would you worry about the shape of the world changing because of this crisis? Globalisation has been a large reason for global growth and now that can get jammed. Is that a worry for you?


I think you are asking two questions and I need to separate the Chinese part of your question from the rest of it. When China was admitted to the WTO in 2002, the assumption was that China would prosper and grow and take advantage of access to the rest of the market and become more of a globalist thereby benefiting themselves as well as the customers in the countries that they dealt with. To a large extent China has been much more of a mercantilist partner taking and managing the situation by not providing the benefit to the other countries. I do not think that is sustainable over any period of time and there needs to be a change in attitude and perspective on the Chinese part that says if you want benefits of a global world, you have to be a participant in the global world as well.

As it relates to the rest of the world, we may have to go through a period of hypertension before that message gets delivered. I do not know the answer to that at this point. But clearly, the Western world was much slower in responding to China than we should have been. Many of the things that are occurring right now with reference to Chinese relations with the rest of the world probably should have occurred 10 years ago and then we would have been in a much better position today for everybody to deal with it.

As far as the rest of the world is concerned, I would only make one comment that there is a shortage of leadership. There is a shortage of leaders setting by and operating by example. That is not good for the world and that is not good for the evolution of a global economic benefit in the world. We need to create a leadership class that is no different than CEO class which is to have an intent on creating benefits for the whole country and ultimately for the whole world.

Why do you think investing is simple but not easy?


You are the one who said it was simple, not me. I think investing is very complex. It requires a very broad understanding of what is going on. As an individual, I am constantly reading and attempting to broaden my knowledge because whether I am looking at real estate or I am looking at energy or logistics, the broader my general knowledge is of everything that is going on, the better able I am to challenge the assumptions and that is really critical.

If you have to give advice to someone who is starting to invest afresh, where do you think the growth highway is for the next 10 to 15 years? Where is that land of opportunity according to you?


I think there are obviously a lot of potential lands of opportunity that exist. You need a lot of flexibility and predictability. Uncertainty is your enemy. We started with real estate and today real estate represents 30% of our world and 70% of our world is everything else. We have constantly thought about how things are moving and how people and communities are responding and what the general flavour of the country or the community is. We then attempt to find ways to service those desires and identifying trends is a critical part of the whole process.

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Although people do not invest in markets, people invest in transactions and there are times when you might invest in areas that are not growing but the price of entry is so low that it makes up for the fact that there is not much of growth. So you analyse each individual opportunity in that fashion rather than saying the market is going this way because if you invest in markets, then you are investing with the herd and the way in which you create capital and create wealth is by investing against the herd.

If Sam Zell in 2020 has to write a letter to Sam Zell of 1980, how will that letter start and how will the letter end?


That is a very good question. I think the letter would start by saying that we have come through a lot of different crises and we have kept our sanity and kept our net worth in line without taking undue risks. We have not bet on the farm, we have been very diverse and I would recommend to future Sam Zell that diversity and spreading the risk is critically important. As smart as we think we are, we are not smart enough to not make mistakes and recognise that we are all capable of making mistakes. We have to create an environment where we can make mistakes and survive.

In this lockdown or the quarantine, what has been your most painful moment and what has been your most joyful moment?


The thing that has made me the most proud and interested is the way in which everybody has interfaced and the way everybody has been willing to change the way they function every day to create the optimum amount of productivity. I think when history looks back at this period, we are going to find that the productivity which you would have expected would have decreased in fact may have increased.

At the same time, lockdowns are not healthy for society and they are not healthy for anybody and I think that the current unrest is as much a function of previous rights and wrongs that we responded to. The fact that people have been sitting at home for the past three months and when they came out, they came out with a lot of anger and a lot of frustration about being cooked up for that long a period of time without being concerned about social distancing and all of the elements necessary to break the curve.

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