Billionaire Investor Bill Ackman Just Issued a Blunt Warning to Wall Street

With more than three decades of investing experience, billionaire Bill Ackman runs Pershing Square Capital Management, which oversees about $33 billion across its funds and Howard Hughes Holdings, investing in equities through concentrated, bottom-up stock picking.

Ackman and his team have built a strong reputation as stock pickers, which is why investors are always curious to see what the billionaire investor and his team are investing in and what they think about the stock market.

Recently, Ackman appeared on CNBC and issued a blunt warning to Wall Street.

Bill Ackman. Image source: Getty Images.

Market structure continues to be a concern

The stock market has experienced significant volatility in recent years, and it's not just because of artificial intelligence. Yes, a small group of AI stocks are now heavily weighted in the broader market S&P 500 (SNPINDEX: ^GSPC), so they do seem to have an outsize impact on the index.

But the stock market is vastly different from what it was, say, 10 or 20 years ago, because technology has given retail investors greater influence over investing and enabled practices like algorithmic trading, in which automated programs execute trades based on predefined conditions.

Furthermore, more people are passively invested and trained to buy the dip when stocks fall, creating another interesting dynamic in the market. Finally, there are additional financial instruments that allow investors to make short-term bets on the market or stocks, not to mention prediction markets.

"Every number of days, I feel like markets are broken," Ackman told CNBC on Nov. 3. "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," Ackman added. "I don't think that's inherently good for the economy, for society, and it's leading to these massive moves in stocks."

Ackman has taken advantage of large, short-term declines in some of the world's largest tech and AI companies, purchasing shares of companies like Amazon and Microsoft when the market turned bearish.

Ackman purchased Amazon after it sold off in 2025 following President Donald Trump's announcement regarding large tariff hikes on most of the country's largest trading partners. Meanwhile, he purchased Microsoft earlier this year when the stock struggled amid concerns about AI's impact on the business.

Ackman believes people are taking on too much risk and trying to get rich quick, which often ends badly.

Stock gains are behind economic strength

Ackman's warning rings true for both retail and institutional investors. Retail investors making big bets and trading on a near-term basis tend to suffer disastrous consequences.

A Schroder's study published in 2020, looking at over 148 years of data on the S&P 500 and its predecessors, found that investors who invested for only a month would have lost money roughly 40% of the time in inflation-adjusted terms.

On the institutional side, investors must remember the significant role consumers play in the U.S. economy, accounting for over two-thirds of spending. In the U.S., consumer health is absolutely vital. With more people investing and the market having rocketed higher in recent years, many have seen their wealth increase.

While it's true the wealthiest Americans still own the bulk of stocks, the bottom half of U.S. households have also benefited.

"With equities as the catalyst, the bottom half has seen its wealth grow nearly twice as fast as the top half across the 25 quarters of the current cycle encompassing the COVID recession and subsequent ongoing expansion," BCA Research's chief investment strategist Doug Peta wrote in a research note back in June, according to Barron's.

So, if this group starts to struggle due to market performance or risky behavior, it could impact the entire economy and, in turn, the entire stock market. That could explain why Ackman is concerned, despite these wild market swings creating investment opportunities for his funds.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Howard Hughes, and Microsoft. The Motley Fool has a disclosure policy.