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Friday, September 30, 2022

Wall Street guru Carl Icahn warns that “the worst is yet to come”

Carl Icahn speaks at the World Business Forum in New York, 2014. Photo: Associated Press/Mark Lenihan, FILE

  • He believes the recession is the key to the current bad moment: “It can’t be fixed”.

  • According to him, the Fed should be more aggressive in trying to stop it

  • He sees opportunity in the market: “There are many cheap things”

Carl Icahn, a Wall Street veteran with a net worth of nearly US$18 billion, has been very pessimistic about the future growth of the US economy this week during the festival of financial innovation. best new ideas for moneyDay Marketwatch.

While his company Icahn Enterprises has a strong 2022 performance amid so much uncertainty – its net asset value is rising 30% in the first half – the world’s 84th richest person has warned investors, according to a real-time ranking of Forbes. Granted that “the worst is yet to come.”

As expected, as MarketWatch reviewed, Icahn argued that inflation plays an important role in a market downturn. “It is a terrible thing,” said the 86-year-old master, alluding to the fall of the Roman Empire: “It cannot be fixed.”

“The party is over”: Icahn wants the Fed to be more aggressive

It is clear to Icahn that part of the blame lies with the federal outlay for the current financial problems in America. “We printed too much money and thought the party would never end. And the party is over,” he said.

While he supported the Fed’s anti-inflationary move to raise interest rates by 75 basis points, Icahn also felt the Fed could have been more aggressive and personally supported a 100-point hike.

Since March, Icahn has had doubts about the Fed, saying in an interview with CNBC that he was not sure the agency could engineer a “soft landing” to address high inflation. He also said that, to hedge against a potential downturn, he bet against shopping malls and commercial real estate.

The Bright Side: Still Buying Shares

In his remote address on Wednesday, the billionaire and former adviser to Donald Trump based his defeatist outlook on the current state of the stock market, which experienced the worst first half of the year since the 1970s.

However, Icahn, who has been in the finance business since 1961, also outlined areas of opportunity for investors and recalled that hedging strategies were the key to their success. A hedging strategy reduces a portfolio’s exposure to market volatility by taking positions with the net effect of reducing risk.

The Princeton philosophy graduate stressed that investors can still find stocks to buy. “I think a lot of things are going to be cheaper and cheaper,” he said, pointing to companies in the oil refining and fertilizer businesses.

Among those trusted companies, he recommends taking a closer look at Texas-based CVR Energy. CVR shares were trading at USD 28.89 on Wednesday.

Investors should also take into account any recent changes to CVR Energy’s analyst projections, as they help to show the changing nature of short-term trading trends, the Nasdaq reported Wednesday.

Carl Icahn During An Event With Investors Hosted By Cnbc.  (Photo: Heidi Gutmann/Cnbc/Nbcu Photo Bank Via Getty Images)

Carl Icahn during an event with investors hosted by CNBC. (Photo: Heidi Gutmann/CNBC/NBCU Photo Bank via Getty Images)

Businesses need to be managed better

As an active shareholder – using a stake in the corporation’s equity to pressure its management – ​​Icahn outlined the idea that today’s businesses should be better managed. “You don’t have to hold management accountable,” he said.

As for the recently passed Inflation Reduction Act and his goal of reducing carbon emissions, he said he understands the need to curb carbon, but he thought the legislation went “too far”.

For the employer, the remedy can be compared to the condition of a sick patient, to whom too many drugs are prescribed. If you “take 100 pills at once, you die,” he said.

Carl Icahn made headlines in April, when Forbes Spain compared him to a “hunter who chases his prey when unprepared”, famous for profiting from companies “by blowing them in”.

“If Warren Buffett is a clear value investor who consistently beats the S&P 500 most years with a clear philosophy, then Icahn benefits from focusing on a strategy based on a sort of war.” The magazine says.

His name also sounded at the beginning of the year, when it became known that he was leading a battle for power for two terms under McDonald’s. The fast food chain confirmed that Icahn named two people after criticizing the company for its use of gestation crates for pigs in its supply chain.

McDonald’s initially promised to end the practice by 2022, but extended the commitment to the end of 2024.

You may also be interested in | Video: How to protect your savings from inflation

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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