Billionaire financier and activist Carl Icahn says that financial markets look "way overpriced" and some investors painted themselves into in "dangerous" corners.
"The public in my opinion is going to get really hurt," he told CNBC
. "This market is in very dangerous territory," he said.
"I think earnings are misstated and sort of a complete mirage," he said.
Icahn made his fortune in the 1980s buying stakes in poorly-performing companies and battling management to turn them around. Currently he is making billion dollar bets on a rebound in energy and commodities.
Icahn has constantly warned about potential problems caused by tax loopholes, stock buybacks and liquidity in the high-yield bond market. Amid his concerns, Icahn said he has hedged his investments much more.
Icahn said that he would recommend investors hold cash given market risks and that he was considering buying "a lot more" shares of Apple Inc..
"I would say keep cash," Icahn said. "You’re only making 1 percent on your cash - what’s better? Making 1 percent or losing 30 percent?" he said.
On Apple, Icahn said: "I’m very seriously considering buying a lot more of it." Icahn owned about 53 million shares of Apple at the end of the second quarter, according to a Securities and Exchange Commission filing. "I think Apple is still ridiculously underpriced," Icahn said.
Icahn recently raised his stake in battered natural gas company Cheniere Energy to 11.43 percent. He also built up a huge position in crushed mining company, Freeport-McMoRan.
"These are great opportunities I think. But here you have to be extremely careful if you're the average investor," he said.
In a video Icahn released Tuesday called “Danger Ahead” on his website,
he warned that gridlock in Washington, Federal Reserve monetary policy and irresponsible CEOs are creating a recipe for trouble.
The 79-year old berated that trio for a bubble in the corporate bond market and the super-rich for not paying enough taxes. “Most of these rich guys — many of them — haven’t done very much,” Icahn said. “People on Wall Street, I know them, they are good friends of mine,” he said.
“But not having to pay full taxes on money that you are earning is an absurdity,” he said, pointing to private equity and hedge fund managers who benefit from the so-called “carried interest” loophole under which their earnings are taxed as capital gains rather than ordinary wage income.
In one section of the video, which includes a clip from the mafia movie “Goodfellas,” Icahn attacks Wall Street for pushing riskier junk bonds on Americans.
“Wall Street does what Wall Street does best, it sells securities,” Icahn said. “I used to laugh with some of these guys who sell these bonds. I used to say, ‘You know, the Mafia has a better code of ethics than you guys.’ You know you keep selling this crap, and you keep selling it.”
Icahn also criticized U.S. companies for parking profits abroad through takeovers and complicated tax structures.
“If we don’t really allow these companies to bring the money back that they are making there (overseas), they are just going to move out of this country,” Icahn told Reuters
“It’s gonna happen more quickly than they think. While Congress is sort of fiddling around, this thing is being done. The country is burning and they’re fiddling.”
© 2024 Newsmax Finance. All rights reserved.