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Blaming American economic woes on a crisis of confidence rather than a shortage of liquidity, business magnate Sam Zell presented a confident view of the nation’s financial strength to the Harvard community yesterday at a talk at Gund Hall.
Zell, a billionaire who was ranked #52 on the most recent list of richest Americans by Forbes magazine, came to Cambridge at the invitation of the Real Estate Academic Initiative, a campus faculty group.
The Chicago native expressed disappointment with the “demagogic” economic language of Democratic presidential candidates Hillary Clinton and Barack Obama, saying he doubts that there will be a recession during 2008.
“There was a significant slowdown in economic growth during the first quarter,” Zell said, “but we’ll recover during the remainder of the year. In addition, the single-family housing crisis is nearing an end.”
Zell cited the February increase in U.S. home resales—the first in over half a year—as evidence that the decline in the price levels of single-family housing was nearing its bottom.
In an earlier interview with The Crimson, Zell discussed the power of leverage—using borrowed capital to increase investment returns—as a major reason why he chose to enter real estate.
“Even when I was in college, I understood the benefits of leverage,” Zell said. “If you start with no capital, then it’s hard to build a motorcycle factory or a lot of other things. Real estate has always been leverageable, and I can enter the business with relatively little capital and build from there.”
For undergraduates wishing to enter real estate, Zell said passion and exposure to the business were the most important characteristics for success.
“Here you are at a major university, and in the course of any given year, you have so many interesting people come and share their ideas,” Zell said. “Plus, you need a basic education in the business of real estate to get started. You need to find internships or entry-level positions at banks and other large institutions where they have a training program that can convert raw intelligence to specific intelligence.”
As for himself, Zell said his zeal for risk taking and his desire to excel drove him to succeed.
“I have always believed that everybody on this earth has a responsibility,” Zell said. “I think that responsibility is to test their limits. I’ve spent my whole life testing my limits. Can I do this? Can I do something that no one else has ever done? Can I do it faster? That’s always been the driving force. Money is only a way of keeping score.”
—Staff Writer Prateek Kumar can be reached at kumar@fas.harvard.edu.
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