Billionaire investor Carl Icahn warned of the possibility of a significant drop in shares at some point, telling CNBC’s Scott Wapner that “wild rallies” in the marketplace always end dramatically.
Wapner reported Icahn’s “Halftime Report” warning during a turbulent day for the stock market.
“In my time I have seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. They end up hitting a wall and undergoing a great painful correction. No one can predict when it will happen. but if it does, look down, “said Icahn. ‘What they also have in common is that it is always said, this time it is different. But it never turns out to be the truth. ‘
The investor declined to go into the details of his positions, but did tell Wapner that he was well hedged.
Icahn’s warning came when the US stock market fell sharply on the first trading day of the new year. The three major commodity indices all fell more than 3% by noon, with the Dow dropping as much as 700 points.
The rough start to 2021 follows an exciting year for markets, in which the S&P 500 rose 16% and certain technology stocks saw dramatic leaps, even as the Covid-19 pandemic turned the global economy upside down.
Due to the rapid rise and rising valuations of stocks, some Wall Street strategists are wary of the short term price of the market. Morgan Stanley strategist Mike Wilson said in a note to customers on Monday that the market was “ripe for a downturn.”
Icahn has made a name for himself as an activist investor. On Monday morning, Herbalife announced that it was repurchasing $ 600 million worth of shares in Icahn and that the activist’s representatives would be stepping out of the board. Icahn said in a statement that while the time for activism at Herbalife, in which he invested more than eight years ago, was over, he intended to remain a smaller shareholder.