On the occasion of the festival “Best New Ideas in Money” of MarketWatch, one of Wall Street’s most famous investors, Carl Icahn he expressed his grim assessment of the US economy, pointing to some sectors that could be an opportunity for investors. In his address to investors, Icahn warned that “The worst is about to come.”
Of course, it’s not hard to see why the billionaire investor could offer such a pessimistic view: the stock market has seen the worst first half of the year since 1970.
Icahn, whose career in finance dates back to 1961 and best known as an activist shareholder, had a solid 2022, despite catastrophic market conditions: the net asset value of his Icahn Enterprises rose by 30% in the first six months of 2022.
Hedging, Carl Icahn’s key to success
During his speech, Icahn said that hedging strategies were the key to his success in 2022 and beyond. And he pointed out that investors can still find stocks worth buying in the current environment.
“I think a lot of things are cheap and will become cheaper”, he said, pointing later companies in the oil refining and fertilizer sectors, reporting in particular CVR Energy, to keep an eye on.
Furthermore, Icahn said that inflation is playing a significant role in the market downturn. “Inflation is a terrible thing”Icahn pointed out, indicating how it led to the fall of the Roman Empire. “You can’t cure it.”
The billionaire blamed federal expenses for the country’s current tax woes. “We printed too much money and thought the party would never end. But the party is over ”.
During his speech, Icahn also commented on the FED meeting, arguing that the US central bank’s decision to raise interest rates for the third consecutive time. 75 basis points to curb inflation, he stressed, however, that he would have preferred a rate hike 100pb.
As for the recently passed new law of the Biden administration, Inflation Reduction Act and his goal of reducing carbon emissions, Icahn said he understood the need to curb carbon, but also stressed that he felt the legislation had gone too far. He compared it to a sick patient who was prescribed too many medications. If “preturn 100 pills at once, you will die“Said Icahn.
Still very much an activist shareholder, Icahn also hammered into the idea that today’s businesses need to be managed better. “There is no responsible holding management,” he said.