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Carl Icahn to investors: ‘The worst is yet to come’

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Wall Street icon Carl Icahn has a warning to his fellow investors: “The worst is yet to come.”

Speaking on MarketWatch’s Best New Ideas in Money Festival on Wednesday via an external feed, 86-year-old Icahn gave a grim assessment of the economy, but also spoke of opportunities for investors.

It’s not hard to see why the billionaire investor could offer such a pessimistic view: The stock market experienced its worst first half since 1970. But Icahn, whose career in finance dates back to 1961 and who has left his mark earned as an activist shareholder, on the other hand, has had a robust 2022: the net asset value of its Icahn Enterprises increased by 30% in the first six months of 2022.

Icahn said hedging strategies were key to his success. And he stressed that investors can still find stocks to buy.

“I think a lot of things are cheap, and they’re going to get cheaper,” he said, later pointing to companies in the oil refining and fertilizer industries — calling CVR Energy
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in particular – as ones to watch.

Not surprisingly, Icahn said inflation played a major role in the market’s downturn. “Inflation is a terrible thing,” he said, noting that it led to the demise of the Roman Empire. “You can’t cure it.”

Icahn blamed federal spending for the country’s current fiscal problems. “We printed too much money and 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 raise interest rates by 75 basis points in its ongoing effort to curb inflation. But he also thought the Fed could have been more aggressive, saying it would have supported a 100-point hike.

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As for the recently passed Inflation Reduction Act and its goal to reduce carbon emissions, Icahn said he understood the need to curb carbon but felt the legislation went too far. He compared it to a sick patient who is prescribed too much medication. If you “take 100 pills at once, you will die,” he said.

Still the activist shareholder, Icahn insisted that today’s companies need to be better managed. “There is no management responsibility,” he said.

Joseph Adinolfi contributed to this story.

Gain insight into investing and managing your finances. Speakers include investors Josh Brown and Vivek Ramaswamy; plus topics like ESG investing, EVs, aerospace and fintech. The Best New Ideas in Money Festival continues on Thursday. Sign up to participate in person or virtually.

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