• Pershing Square's Bill Ackman warns that excessive leverage and speculative trading are distorting stock prices, creating both dangers and opportunities.
  • He criticizes daily leveraged products and perpetual futures as casino-style instruments, but says volatility has allowed Pershing to buy Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Alphabet (NASDAQ:GOOGL) at attractive prices.
  • The CFTC's decision to allow perpetual futures on individual stocks in the U.S. puts Ackman's critique in stark relief against a regulatory push for more leveraged products.

A Market 'Broken' by Speculation

Bill Ackman, the billionaire founder of Pershing Square, said the stock market is being distorted by speculative trading and excessive leverage, warning that prices are increasingly disconnected from business fundamentals. Speaking on CNBC's "Squawk Box" Wednesday morning, Ackman described the current environment as "casino-style" and singled out daily leveraged products, perpetual futures, and a gambling-like approach to investing as potential threats to both investors and the broader economy.

The warning comes as U.S. regulators move to expand access to complex derivatives. On Wednesday, the Commodity Futures Trading Commission announced that perpetual futures on individual stocks can begin trading on appropriately dual-registered U.S. exchanges. CFTC Chairman Michael Selig said the move would bring trading onshore into a regulated framework rather than pushing participants toward offshore, potentially unregulated platforms. The timing is notable: Ackman's criticism landed just as the agency opened the door to a product class he views as part of the problem.

Ackman's argument is not that markets are universally broken, but that leverage has distorted short-term pricing. He referred to markets "when there was 95% leverage," though that figure is his characterization rather than a measured market-wide ratio. Spokespeople for Pershing Square did not respond to a request for comment on the leverage estimate, and CNBC's report did not establish that today's stock market operates at such a level. "Broken" is Ackman's assessment, not a finding by an exchange or regulator.

Buying Opportunities Amid the Chaos

For all his warnings, Ackman said the volatility has created opportunities for patient investors. He disclosed that Pershing Square bought Microsoft during this year's software-sector selloff, Amazon following tariff-related declines, and Alphabet amid disruption fears surrounding ChatGPT. He stressed that these purchases occurred during different selloffs and were not necessarily new trades announced today.

Ackman also reiterated his enthusiasm for Visa (NYSE:V) and Mastercard (NYSE:MA), calling them "two of the world's greatest businesses," and highlighted Netflix (NASDAQ:NFLX) as a portfolio holding. Pershing's renewed position in Netflix was disclosed in August, following a prior stake that was exited in 2022 after subscriber losses crystallized a loss of more than $400 million. The mixed record underscores that buying after a price decline is not automatically a winning strategy.

Ackman's comments came a day after Pershing Square reported third-quarter results that painted a mixed picture. The asset manager's GAAP revenue fell about 14% year over year to $56.6 million, while GAAP earnings attributable to Pershing Square Inc. showed a loss of $19.9 million, or $0.05 per share. Fee-related earnings, a non-GAAP measure, rose 13% to $63.7 million, and fee-related revenue increased 10% to $75.6 million. The company reported a third-quarter NAV return of 3.5%, outpacing the S&P 500's 2.3%, and management cited approximately $24 billion in fee-paying assets under management during its November 3 call.

The corporate results also reflected a one-time item: conversion to a Nevada corporation introduced an $11.5 million corporate tax provision, a structural factor that complicates comparisons with prior periods.

Regulatory Crosscurrents

The CFTC's move to permit equity perpetual futures adds a new dimension to the debate. Chairman Selig framed the decision as a way to give U.S. participants access within a regulated framework, arguing that regulated perpetual futures can support risk management and price discovery. The announcement applies to designated contract markets with the required SEC registration for security futures products, not unrestricted trading everywhere.

Ackman's critique echoes long-standing concerns from investor-protection advocates. The SEC has warned that most leveraged and inverse ETFs reset daily, meaning their returns over weeks or months can diverge substantially from a simple multiple of the underlying asset's return, particularly in volatile markets. Buying on margin can also expose investors to losses exceeding their initial investment. The CFTC's position is that bringing trading onshore improves oversight relative to offshore venues, but the agency's action does not resolve the question of whether these products are appropriate for retail investors.

Pershing Square's own investment thesis offers a counterpoint to Ackman's market critique. In its latest shareholder commentary, the firm described major cloud companies' roughly $740 billion of capital expenditure as offensive investment rather than merely defensive spending. That view underpins its stakes in Microsoft and Alphabet, two companies at the center of the AI investment cycle. Ackman's warning about speculation, in other words, coexists with a constructive long-term view on the very technology names most affected by it.

For now, the key tension is that leveraged-product access is expanding at the same time a prominent investor is warning about its consequences. Investors would do well to distinguish product launches and regulatory permissions from evidence of actual adoption, leverage levels, or systemic stress—today's announcements alone do not establish those outcomes. Ackman remains willing to own selected businesses, but he is questioning how increasingly leveraged trading sets their short-term prices. Whether regulators and investors heed that warning remains to be seen.