Wall Street icon Carl Icahn has warned his fellow investors: “The worst is yet to come.”
Speaking Wednesday at MarketWatch’s Best New Ideas on Money Festival via remote feed, Icahn, 86, gave that bleak assessment of the economy, but also talked about areas of opportunity for investors.
It’s not hard to see why the billionaire investor might offer such a pessimistic view: The stock market saw its worst first half year since 1970. But Icahn, whose career in finance dates back to 1961 and he has made his mark as an activist. shareholder, 2022 was strong in contrast: The net asset value of his Icahn Enterprises increased by 30% in the first six months of 2022.
Icahn said hedging strategies were key to his success. And he emphasized that investors can still get to buy stocks.
“I think a lot of things are cheap, and they will get cheaper,” he said, later referring to companies in the oil-refining and fertilizer businesses — he cited CVR Energy CVI,
in particular — as heads to watch.
Not surprisingly, Icahn said inflation played a significant role in the market downturn. “Inflation is a terrible thing,” he said, noting that it led to the collapse of the Roman Empire. “You can’t cure it.”
Icahn blamed federal outlays for the country’s current fiscal woes. “We printed too much money, and we thought the party would never end. And the party is over,” he said.
Icahn said he supported the Federal Reserve’s move on Wednesday to increase interest rates by 75 basis points in its ongoing effort to curb inflation. But he also thought the Fed could be more aggressive, saying he would support a 100-point hike.
Regarding the recently approved Inflation Reduction Act and its aim to reduce carbon emissions, Icahn said he understood the need to curb carbon, but thought the legislation went too far. He compared it to a sick patient who has been prescribed too much medication. If you take “100 pills at once, you will die,” he said.
Still very much an activist shareholder, Icahn pushed the idea that today’s companies need to be run better. “There is no accountable management,” he said.
Joseph Adinolfi contributed to this story.
Get insights into investing and managing your finances. Speakers include investors Josh Brown and Vivek Ramaswamy; plus, topics such as ESG investing, EVs, space and fintech. The Best New Ideas on Money Festival continues on Thursday. Register to attend in person or virtually.