Carl Icahn Warns of Stock Pullback, while Big Fund Manager Recommends Holding Gold (Video)

Carl Icahn made news this week when he sold his stake in Netflix. However, the bigger message Icahn shared with CNBC was that he thinks the United States stock market is “extremely overheated.” He warned investors that he sees similar problems as 2008:

I personally do [think that the US equity market is in for a dramatic pullback]. I’ll tell you that to me it’s a no-brainer.”

Billionaire investor Icahn isn’t the only high-profile advisor warning against high-yield bonds. Ian Spreadbury, one of the biggest bond fund managers in Britain, is warning investors to start saving in cash and precious metals.

The Telegraph reports that Spreadbury is worried about another “systemic event” rocking the markets, “possibly similar in magnitude to the financial crisis of 2008.”

The best strategy to deal with this, he said, was for investors to spread their money widely into different assets, including gold and silver, as well as cash in savings accounts. But he went further, suggesting it was wise to hold some ‘physical cash’, an unusual suggestion from a mainstream fund manager.”

Highlights from Icahn’s interview:

“I’m very concerned about the market. I think the market is overheated, especially the high-yield market. It’s sort of a sad commentary, because I think the public is walking into a trap again, as they did in ’07. What I’ve said is as I get older, I think it’s almost the duty of well-respected investors… to warn people, to tell people that you really are making errors…

“As interest rates have come down, they’ve got used to making even more money in a bull market in bonds. They don’t understand the great risk that is there. You have bonds, and if you read the covenants of these bonds, they’re covenant light. Meaning that they’ve been able to sell these bonds where if the company has problems in a single-B-rated company – and I think many of them will have problems ahead, because I think there will be unchartered waters ahead – and if you do have problems in a high-yield market with those bonds, they’re so covenant light, it’s worse than ’08, where they can put bonds above your bonds… I think the default rate can go up…”

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