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00:00I think there are places that are on investable that were investable a month ago. But I also think that it got for an investor. This is a level of uncertainty that we haven't had to deal with and that you know if you're an investor today and you're investing in Russia how do you feel about your investments in China. How do you feel about investments in other places in the world that have not responded to the Ukraine invasion. The way we would have expected. So I think that if anything I think that that as an investor I think you stay closer to home. And I don't think you become as involved or are a believer in globalization as you might have you know six months ago. Are there some things that are more attractive today than we were before. I mean for example gold where are you on gold these days. Well I I you know I made the mistake that made a mistake. But I said that I had bought some gold for the first time in my life. I historically viewed gold is not an income producing based metal. But I think that the way in which fiat currencies have been extended and printed the more I get concerned about whether or not we're going to see weakness in the value of the dollar or even loss of as soon as every year stature. So I bought some gold and I think there was some gold to be a part of every buy every investors balance. But I'm not having turned into a gold bug or believe that it ought to be a big chunk of anybody's portfolio. So let me press just one step further. When you talk about concern about fiat currencies. Some people are saying that's why we need to go to some of the digital currencies. That's where you go Bitcoin things like that for that very reason. Are you at least intrigued for having some of that in your portfolio. If I understood it I might think that that was a good idea. I think before we came on this program how you and I kibbutz about the fact that we were old and we hadn't really adapted as well to the digital world as our younger cohorts I don't really I mean I I understand the concept of digital currency and block chain and stuff. I don't feel comfortable or feel I understand the security involved and I keep reading about that. You know big chunks of capital being wiped off some digital map by hackers. And I wonder does that make sense. So at least so far I haven't had a cryptocurrency in my portfolio. So what about energy. You've been involved in energy through the years. Energy is very much in the center right now given what's going on with for example the ban for U.S. Russia. The oil puts the price of oil for goodness sakes. Who would have thought were you on energy investments right now. Well I've always believed that diversification is your friend. And I've always attempted to have some kind of energy diversification and continue to do so. I think the US government attitude about energy and the Biden administration in particular I think is extraordinarily naïve. And I think the price of oil is very much a fact that they've sent this message whether it be blocking pipelines or or making permitting impossible to get including you know banks basically saying you know when when you're you know when your revolver comes to we're not going to renew it because we've got to get low. We got to reduce our energy exposure. The transition from fossil fuels to renewables is going to be a very long process and we're acting as though it's going to be a next week process. And I think that's very dangerous. And I think it's going to lead to overpriced fossil fuel when there is no choice as to its need. There are reports this week that the buy demonstration may be rethinking some of what they've said and done when it comes to fossil fuels and are reaching out even to the oil industry. Is that feasible to turn around at least to some extent on that issue. As an investor can you go back into for example shale oil and really reinvest of that or are you too nervous about whether they'll stick to their policy. You know first of all I don't believe there is a new policy. Second of all and then you know at the same time that Biden was prohibiting you know. Part of Russian oil he was doubling down on you know renewables and blocking pipelines et cetera. So whether or not the administration has given thought to that it certainly doesn't appear to be the case. And even if it did make a statement to that I wonder as an investor how much I would trust it and how much how much in the way of guarantees I would demand before I would allocate more capital into fossil fuels. So for you right now as you look at it given what you know going back into shale in a big way is not a particular attractive alternative. Yeah. We have shale investments today. Know we continue to have them. We're not eliminating them. But the natural expansion that would come with rising prices has also not occurred because the administration is so negative and so discouraging. What about other alternatives for the administration in trying to do something about the price of crude but also natural gas for example Saudi Arabia. Saudi Arabia could increase their output substantially. They seem to be reluctant to do that. Venezuela. You know the forbidden Venezuela. Maybe you can get that. And even Iran. But do you want to do all of that while you're inhibiting made in America fossil fuels. It just doesn't make any sense. What is Venezuela going to do with the resources that are going to come from releasing change sanctions. They're not going to be friendly to the United States. It doesn't make sense. I mean the whole idea of the administration being focused on getting the Iran population back in in the world rather propagating all kinds of stuff you know all over the Middle East just doesn't make any sense giving them the resources to do that. Last time we did that the first thing they did was they financed Hezbollah and various other terrorist groups so that you know we ought to be supporting domestic policy to be supporting domestic fossil fuels. We have to be realistic about the fact that a transition will occur but it's not going to occur because somebody in Congress or somebody in the White House thinks tomorrow would be a good idea. It's got to occur based on a pragmatic assessment of how long it will take and what level of upheaval it will cross. Sam we started this conversation where you're saying there's a lot of uncertainty given what's going on in Ukraine what's going on in Europe as an investor. How do you deal with this sort of geopolitical uncertainty. Do you on the one hand say I don't know what's going to happen so I just have to get more conservative draw my horses and maybe go into cash for example. Or do you try to game it out and think it could go this way. It could go that way. And this is the way I should put my bets. I can't speak for any other investor. I can only speak for myself. And the result from for myself is added liquidity not gaming it because in effect we have no proven beyond a reasonable doubt that as prognosticators of what Putin may or may not do is almost impossible to assess. And certainly we've been wrong over and over again. So I think diversification liquidity patients are really the governing factors in terms of how we might respond to the uncertainties that this current environment is creating. Sam. On top of everything else we're facing we've got real inflation issues in this country. We're going to have CPI numbers out tomorrow. We have the Fed meeting next week. Give us your sense of where we are in inflation and how difficult a task the Fed has right now and try to get it back under control. Well you know getting inflation back under control has to start with stopping flooding the market with capital. I mean the degree to which I mean you know that we used to talk about you know legislation that amounted to adding billions to the liquidity. Now we're talking in trillions. I think that Covid was a very very much of a challenge. But I think we responded to Covid by doubling down and and creating levels of liquidity. They had to create inflation. I can't imagine that anybody who's an observer of what's going on could possibly be surprised at the inflation numbers when in effect you were giving everybody 300 dollars a month for every child you were you know doing PPA sound. You're doing all these different things to create staggering amounts of liquidity into the system. And I think we're starting to see the impact of that not only on inflation but in a number of people quitting jobs et cetera. We have to recover from doing that. So as you suggest it was a liquidity both on the monetary side and the fiscal side and simultaneously to some degree. So what can we do now as a practical watch the Fed do right now. I think the Fed should stop buying securities 80 billion dollars a month of added liquidity by buying securities. I think it should stop buying securities. I think we need to raise interest rates. I think we probably could raise interest rates 200 basis points over a couple of year period and have little or no impact. It's a lot to be said for the fact that having extraordinarily low interest rates or free money instead of being an incentive is an incentive. The other way and that and destroys the sense of urgency. And in a capitalistic system we need a sense of urgency to encourage people to take risk and make decisions. You've made a fair amount of money I think and I know a great reputation of real estate. Is real estate more attractive today. Given what you're seeing with inflation and if so what forms of real estate. I'm we have we have been basically net sellers of real estate for ever since the Great Recession. Real estate yields have gotten so low that it's like you know shorting a stock that's trading for a dollar. If you're right you make a dollar. If you're wrong you get hung in the same manner. You know when you're buying office buildings at a 3 percent yield that's really tough to justify over any long period of time. So I think that real estate needs to cap rates have to go up. I think that we've got to understand that it's a supply and demand game and that I think it's at the moment less attractive than a lot of other alternative forms of assets. And there are an awful lot of us who look to you as an investor. You know it could take some advice from. So give us your secret right now. Is there some asset class that you're really interested in that we may all be missing. I don't know that the asset classes that everybody could be missing is the right standard. I think that mean we've found ourselves spending time in what I call generational investing where we've basically blocked private companies taken out 80 percent of the errors rolling forward the other 20. And we've found very good opportunities in various different fields. And at least at the moment that's the most attractive form of investing that we've been exposed to.

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Sam Zell on Buying Gold, the Fed, U.S. Shale

Billionaire investor Sam Zell is joining the chorus of energy industry leaders and lawmakers calling on President Joe Biden to offer more support to U.S. shale as the country cuts off oil supplies from Russia. Zell also talks about the price of oil, investing in gold and Federal Reserve monetary policy. He spoke to Bloomberg's David Westin. (Source: Bloomberg)

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