What We Learned from Carl Icahn’s Video on Dangers in the Economy and Stock Market

In this way, low interest rates are building bubbles in real estate, equities, and other markets. This leads to smaller investors being forced to start buying riskier stocks and even high-yield bonds.

“High-yields really stands for junk bonds. People are buying these not really understanding what they are buying. And if you just look at the numbers, they are amazingly risky. You have $2.2 trillion of junk bonds, up five years ago, up a trillion dollars. That’s a hell of a lot when you think about the whole S&P is $19 trillion.”

Wall Street sells these high-yield bonds without any consideration for the people who buy them, who are losing money, which is especially bad taking into account that many big players on the Street are shorting the same securities they sell.

“I look back and I love this country, but I sure as hell don’t love a lot of politicians in it. They are taking advantage of the system and it’s just deja vu. […] I think it was Santayana that said “Those who don’t learn from the history are doomed to repeat it.” And I am afraid we are going down that road,” Mr. Icahn concluded.

Icahn Capital currently holds a public equity portfolio worth around $31 billion, with the largest part invested in its own stock, Icahn Enterprises LP (NASDAQ:IEP), which amasses over 30% of its equity portfolio. On the second and third spots are Apple Inc. (NASDAQ:AAPL) and eBay Inc (NASDAQ:EBAY), in which the fund holds 52.76 million shares and 46.27 million shares respectively. They are followed by CVR Energy, Inc. (NYSE:CVI) and Federal-Mogul Holdings Corp (NASDAQ:FDML), with stakes of 71.20 million shares and 138.59 million shares respectively.

Disclosure: None