14 ms·

Carl Icahn is Betting on a Stock Market Crash

125 points by yonibot 10y ago

imaginenore 10y ago
Market going down 20% is what, going back to mid 2013 levels? Hardly a scary crash.
- TheOtherHobbes 10y ago
  Look up how far stocks fell in 1929. Most corrections are 20-40% - which is bad enough. But every so often you get something much, much worse.
  - charlesdm 10y ago
    The fed has shown they're not willing to let that happen. They'll start up the printing press again, then. Quantitative easing has effectively been the biggest gift in the last 50 years to the wealthy.
    - adventured 10y ago
      Little question the market has finally realized the Fed has no intention of raising interest rates, thus the huge dollar tumble since December. At this point more QE and negative interest rates in a year or two are far more likely than meaningful hikes. If the dollar hadn't fallen so much in the last five months, the stock market would be quite a bit lower already thanks to horrible corporate earnings.
    - aminorex 10y ago
      Very true, but... Eventually all that money shows up as inflation. Which devalues the SPX. The wealthy have been net sellers of SPX for over a year now. It is only the collapsing velocity of money which has prevented an inflationary tear so far...but that has a hard limit at zero ( unlike interest rates) which can only be reached by either obliteration of technological society or a reorganization of economic activity to be uncorrelated with money flows
      - charlesdm 10y ago
        If you believe that, then you would do well to swap your dollars for some other currency used by countries with low inflation and a more prudent fiscal policy.
Hermel 10y ago
And previously, he was betting on AAPL to raise to 200$. To be fair, the coming Trump victory might not be priced in yet. Also, Brexit could bring some turbulences.
- charlesdm 10y ago
  He did end up making a 45% gain in < 2 years on billions of dollars by betting big on AAPL. If, as the fund manager, he gets 20% of those gains, he made $500m-1bn.
  - adventured 10y ago
    It's his own money (~$20 billion) he plays with these days. So he kept the entire gain.
    - charlesdm 10y ago
      Must've been a good day, when he liquidated.
- Unklejoe 10y ago
  How do you think a potential Trump victory will affect the market, in terms of short term immediate effects? (I'm actually asking, not being sarcastic). It's hard for me to predict in this case, but if Bernie were to win, I kind of expect a temporary downturn as people panic due to Bernie's promise of attacking "wall street".
  - imglorp 10y ago
    What attacks could a president perform? An R congress will plant their heels. Even attempting to clean up malfeasance and nepotism at the SEC, "the President does not possess the power to fire the appointed Commissioners, a provision that was made to ensure the independence of the SEC." https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission#Commission_members https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_C...
cm2187 10y ago
My favorite chart is to superpose the S&P for the past 10 years with the size of the Fed balance sheet. It's almost a perfect match. What is certain is that the Fed B/S isn't going up anymore (but it isn't reducing either). I don't know if we are heading toward a crash, but unless we have QE4, stocks are certainly not going up.
- lujim 10y ago
  Negative interest rates and company stock buy backs might be able to allow markets to keep going for a while. Negative rates cause investors and sovereign wealth funds to pour money into equities. The Bank of Japan owns 50% of the ETFs in Japan. That should scare people. Stock buy backs artificially inflate reported company earnings. Companies take on cheap debt to buy back shares of their own company (at historically high valuations) to keep investors happy and beat earnings estimates. This game of musical chairs can run for a while.
  - aminorex 10y ago
    The demographic cycle compels a bottom in person ratios around 2024, but markets are front-running machines, so, no, not much longer.
  - shostack 10y ago
    And analysts aren't wise to this practice? Wouldn't the market have priced in that charade already?
    - lujim 10y ago
      Everyone knows it's happening, the real question is whether it is a charade or not. Buy backs are a legitimate practice for companies that want to reward shareholders and gain a bigger chunk of their own business. Nothing sketchy there. The question is why would a company like Nike want to buy back it's own stock at historically expensive valuations rather than use that money on new products or to expand their market share? Are they doing it to gain a bigger piece of their own business, or are they doing it to juice earnings because top line sales are decreasing and they need to beat earnings expectations to keep the share price up? The jury is still out.
blisterpeanuts 10y ago
What goes up, must come down. The stock market is cyclical and a correction is bound to happen. I don't see why a Trump presidency would be bad for the market. Maybe it would take a short term dive because of his stance on protectionism, but long term it would probably rise because of his goal to repatriate dollars and stimulate domestic manufacturing. Right now, it's the uncertainty about Senate and presidential outcomes that might spook investors. Even the Supreme Court is in play. We live in interesting times.
- lintiness 10y ago
  anything positive about trump gets shilled to the basement on the internet, cable news, ...
  - forgetsusername 10y ago
    I'm not sure about that. I think Trump gets a lot of play as a product of New York, compared to the rest of the republicans. /r/The_Donald rules reddit; often times every 5th story comes from that subreddit. These thing have contributed to his success.
    - lintiness 10y ago
      i wish i could believe you. everytime i venture to r/all, it's littered with sanders believers and their conspiracy theories.
      - digitalneal 10y ago
        Sanders believers are the new Rand Paul believers of this election cycle.
        m0llusk 10y ago
        Hillary got to where she is today by doing well and failing in primaries and then contributing significantly to the administration and its agenda.
lujim 10y ago
To repeat the well worn quote from John Maynard Keynes. "The market can remain irrational longer than you can remain solvent." This is especially true in the post financial crisis world of financial engineering, quantitative easing, and zero/negative interest rates. This market will come down hard at some point, but shorting it has been a losing proposition 99% of the time.
- tma-1 10y ago
  He doesn't have to short, he can buy put options on the S&P500.
  - deleted 10y ago
    [deleted]
  - lujim 10y ago
    I've got put options on SPY as well as a portfolio hedge. They lose value every day (theta or the premium you pay for time) and if the S&P goes up puts lose value so fast it would make your head spin. In the end for a big liquid etf like SPY, they aren't that much different than going short. Now for small companies that could skyrocket overnight and destroy a short seller, puts offer some protection since your loss is capped at 100% instead of theoretically infinite losses. edit: I should add that puts give you leverage. To short 100 shares of SPY you would need $20000 worth of margin, while to buy 1 sept 2016 in the money put (100 shares worth) you probably only need to cough up $800. If the delta value of the put is equal to 1, your gains or losses will move inline with that 100 share short position.
    - zymhan 10y ago
      That is a very accessible explanation, thanks.
    - ikeboy 10y ago
      Another way of looking at it: Shorting is (roughly given efficient market assumptions) equivalent to buying a put and selling a call at the same strike. If the stock has no chance of going up a lot, the call will be relatively cheap, and so selling the call won't change much. Edit: on the other hand if it has low volatility in both directions, then both are cheap, and it's a bit more complicated. Buying the put will be cheaper, but shorting will also require less margin because the margin provider will have less risk. (See e.g. http://openmarkets.cmegroup.com/3785/understanding-margin-changes http://openmarkets.cmegroup.com/3785/understanding-margin-ch...). This should cancel out in theory, but might not for various reasons like transaction costs.
ikeboy 10y ago
I don't see how this article adds anything over its source http://www.zerohedge.com/news/2016-05-09/historic-150-net-short-position-carl-icahn-betting-imminent-market-collapse http://www.zerohedge.com/news/2016-05-09/historic-150-net-sh..., that article has strictly more information. Can the url be changed?
- kevando 10y ago
  +1
- lujim 10y ago
  OP was probably using Fortune as a "wrapper class" for Zero Hedge to give it some reputability. I like Zero Hedge but old Tyler Durden is a bit of a perma-bear. Although that assumes that Fortune is reputable I guess.
  - ddeck 10y ago
    >Although that assumes that Fortune is reputable I guess Indeed. I'm not sure how reputable can a site be with several thousand non-staff "external contributors" producing content. I've never found anything original there and typically avoid it in search results.
    - snowwrestler 10y ago
      Are you confusing Fortune with Forbes?
      - ddeck 10y ago
        While I agree that Forbes is much worse in this regard, I was referring to Fortune: >Heeding the call for traffic growth, Fortune has joined the growing ranks of publishers that are opening up its site to posts written by non-staff contributors. Each publisher has a slightly different approach, and Fortune is no different. The Time Inc. title draws from a 5,000-person contributor network who supply what Fortune digital editor Aaron Task calls “our op-ed page.” http://digiday.com/publishers/fortune-hopes-avoid-platform-publishing-pitfalls/ http://digiday.com/publishers/fortune-hopes-avoid-platform-p...
snake_plissken 10y ago
Not a bad idea. Greece and its "debts" will rear their heads again this summer, as there are some pretty significant payments due in June and July: http://www.ft.com/ig/sites/2015/greek-debt-monitor/ http://www.ft.com/ig/sites/2015/greek-debt-monitor/. Just the spark un-needed in global markets where it seems everyone is in that pre-dive mood of complacency. The continuing question is: do you play chicken with the central banks of the world?
- tinkerrr 10y ago
  Closer to the US, don't forget the debt default by Puerto Rico: http://www.bbc.co.uk/news/business-36184250 http://www.bbc.co.uk/news/business-36184250
  - snake_plissken 10y ago
    Excellent point, I totally forgot about that. $2 bils due July 1.
rcarrigan87 10y ago
This article feels like some pretty lazy reporting. Icahn's strategy, I'm sure is much more nuanced than - "The market will crash."
pmorici 10y ago
Not really surprising there are a lot of reasons to think there will be a market downturn the thing that seems to be a big question mark is will/can it happen with the fed's current policies.
stefap2 10y ago
"-150% Net Short Position" What does it mean?
- 1123581321 10y ago
  For example: you have $1000, borrow another $500, and use the whole $1500 to short Apple. Icahn has a much more complex position, but essentially, he's borrowing and using derivatives to get a $1,500 return for every $1,000 drop in value.
S_A_P 10y ago
Icahn thinks the market will crash, enters a short position. Then lobbies the media to help it crash.
- golergka 10y ago
  Is there evidence of active lobbying, ie making media do what they wouldn't do on their own of they pursued interests of their readers? Because this story in particular seems like an honest, interesting story by a good journalist.
- shostack 10y ago
  I wonder how much the media practically begging for it to crash could create a self-fulfilling prophecy.
ddeck 10y ago
He may well be right. If you say it often enough, eventually you will be. 2011: >You’ve got to be myopic if you’re not at least concerned that there might be a major correction [1] 2013: >Activist investor Carl Icahn on Monday said there was a chance the stock market could suffer a big decline, saying valuations are rich and earnings at many companies are fueled more by low borrowing costs than management's efforts to boost results [2] 2014: >Carl Icahn says 'time to be cautious' on U.S. stocks [3] >Carl Icahn Reiterates "We Are In A Major Asset Bubble" [4] 2015: >Icahn warns of potential looming catastrophe...Icahn said he's "more hedged now than I've been in years." [4] [1] https://next.ft.com/content/c9612302-4c09-11e0-82df-00144feab49a https://next.ft.com/content/c9612302-4c09-11e0-82df-00144fea... [2] http://www.reuters.com/article/us-investment-summit-icahn-idUSBRE9AH11720131118 http://www.reuters.com/article/us-investment-summit-icahn-id... [3] http://www.reuters.com/article/us-investing-icahn-exclusive-idUSKBN0FF2DV20140710 http://www.reuters.com/article/us-investing-icahn-exclusive-... [4] http://www.zerohedge.com/news/2014-08-12/carl-icahn-reiterates-we-are-major-asset-bubble http://www.zerohedge.com/news/2014-08-12/carl-icahn-reiterat... [5] http://www.cnbc.com/2015/09/27/-of-potential-looming-catastrophe.html http://www.cnbc.com/2015/09/27/-of-potential-looming-catastr...
- 11thEarlOfMar 10y ago
  Meanwhile, the S&P Increased 65%. (2011 ending @ ~1257)
- UVB-76 10y ago
  If the implication is that his statements in 2011 and 2013 were predictions that turned out to be false, I don't think these quotes are sufficient evidence. That an inevitable correction has been delayed by sustained government efforts does not make predictions of a correction any less prescient.
  - greeneggs 10y ago
    It is hard to call prescient or insightful a model of the economy that doesn't take into account government actions.
  - 10y ago
11thEarlOfMar 10y ago
The analysis needs to factor overall market earnings [1]. It is more level-headed to look at the S&P 500 P/E ratio, which does show a historically over-valued market, though not dramatically over-valued at this time [2]. S&P 500 overall earnings hit all-time highs in 2013 and 2014, but have fallen back somewhat in 2015. So it's a pretty safe bet to short, if that is one of your investment tools. But I don't think you'll really make a killing, unless earnings decline substantially. I've chosen to just divest stock-based investments and increase cash somewhat, and then cherry-pick value in dividend stocks. [1] http://www.multpl.com/s-p-500-earnings/table http://www.multpl.com/s-p-500-earnings/table [2] http://www.multpl.com/ http://www.multpl.com/
marincounty 10y ago
"In April, Icahn argued that stock prices have been pushed artificially high by low interest rates, but that economic fundamentals could not support those prices." Along with Druckenmiller. Then, I hear Willie Brown is concerned about what San Francisco is going to do with thousands of unemployed computer programmers. The top two arn't lightweights. Don't we all kinda look at all that free money the rich have played with, and wonder what's up? I look at my cd, and I made $9 dollars. It seemed like a few years ago I made $350? I look around and don't see this great economy? I see a few hot spots, and a huge swath of people just getting by. I see too many people who just gave up. (I don't want to argue. The Bulls are probally right. I'm always wrong on predicting a crash.)
Matt_Mickiewicz 10y ago
He may be onto something. There's a huge and widening gap between GAAP vs. Non-GAAP earnings: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/24/S%26P%20PE%20GAAP%20non%20GAAP_0.jpg http://www.zerohedge.com/sites/default/files/images/user5/im... U.S. corporations have issued more than $9.9 trillion in debt since 2008. Last year, corporations issued a record $1.5 trillion in debt. 76% of the companies in the S&P 500 bought back their own shares ...most companies used debt to pay for these buybacks, in a clever move of financial engineering to boost EPS. To top it off, we've been in a multi-quarter earnings recession for the S&P, and total retail sales growth has dipped below 3% which has always correlated with a recession: http://i0.wp.com/bawerk.net/wordpress/wp-content/uploads/2016/04/Retail-Sales-since-1968-w-recession-threshold.jpg http://i0.wp.com/bawerk.net/wordpress/wp-content/uploads/201...
- tostitos1979 10y ago
  The stock market seems sane when compared to real-estate prices in major cities. In Canada, people are mostly pointing fingers at foreign buyers. People are generally ignoring the elephant in the room - lowest rates in a generation. Despite being in the 1% of wage earners, we personally are so badly screwed ... we'll never be able to afford property in hour home towns unless there is a 50% crash. I don't think that is likely at all ... so we're (and most of our friends who missed the buying opportunities of 2011-12) are figuring our what remote town to move to so we can earn some fraction of our salaries but have a shot at home ownership. As rational people, we know we cannot afford million dollar homes if interest rates ever normalize. In Canada, you cannot get mortgages longer than 10 years ... so it is very grim for us. People who don't know math are raking it in while we are suffering in no uncertain terms. But no one seems to care.
  - mttddd 10y ago
    I am just hoping self driving cars come out in the next 5-10 years and hopefully that expands the geographic area you can reasonably live in and still commute to work.
    - 10y ago
yonibot 10y ago
To badly paraphrase the words of Jack Bogle - "I don't know anyone who can successfully time the market, and I don't know anyone who knows anyone who can either."
jobu 10y ago
"In April, Icahn argued that stock prices have been pushed artificially high by low interest rates, but that economic fundamentals could not support those prices." That tells me that his bet is actually that the Fed will keep raising rates, which would likely push down stocks.
MicroBerto 10y ago
One thing not yet discussed here is the demographic profile of the US: Baby Boomers are now retiring. Over the next 20 years, they will be drawing down on their retirement accounts, putting slow yet constant negative pressure on the market. Japan has had similar pressure and it is one thing that contributed to the Lost Decade.
- __derek__ 10y ago
  I wonder what kind of effect that will actually have, given the stark divide in retirement preparations. On the one hand, we have a lot of people who have little retirement savings, who play a small role in the markets and will delay retirement (or just never do it). On the other, we have some people with well-planned retirement accounts. I would not be surprised if a fair number of the latter have planned to live only on the proceeds of their investments. That will introduce some bias towards dividends over reinvestment, I suppose. This is speculative, granted.
nikdaheratik 10y ago
The guy is quotable, but I don't understand why anything Icahn says about the market is actually newsworthy. He never says or does anything that isn't about benefiting the interests and net worth of Carl Icahn (inc.). May as well be quoting press releases from SCO lawyers about software patents and Unix.

125 points by yonibot 10y ago

imaginenore 10y ago

Market going down 20% is what, going back to mid 2013 levels? Hardly a scary crash.

TheOtherHobbes 10y ago
Look up how far stocks fell in 1929. Most corrections are 20-40% - which is bad enough. But every so often you get something much, much worse.
- charlesdm 10y ago
  The fed has shown they're not willing to let that happen. They'll start up the printing press again, then. Quantitative easing has effectively been the biggest gift in the last 50 years to the wealthy.
  - adventured 10y ago
    Little question the market has finally realized the Fed has no intention of raising interest rates, thus the huge dollar tumble since December. At this point more QE and negative interest rates in a year or two are far more likely than meaningful hikes. If the dollar hadn't fallen so much in the last five months, the stock market would be quite a bit lower already thanks to horrible corporate earnings.
  - aminorex 10y ago
    Very true, but... Eventually all that money shows up as inflation. Which devalues the SPX. The wealthy have been net sellers of SPX for over a year now. It is only the collapsing velocity of money which has prevented an inflationary tear so far...but that has a hard limit at zero ( unlike interest rates) which can only be reached by either obliteration of technological society or a reorganization of economic activity to be uncorrelated with money flows
    - charlesdm 10y ago
      If you believe that, then you would do well to swap your dollars for some other currency used by countries with low inflation and a more prudent fiscal policy.

Hermel 10y ago

And previously, he was betting on AAPL to raise to 200$. To be fair, the coming Trump victory might not be priced in yet. Also, Brexit could bring some turbulences.

charlesdm 10y ago
He did end up making a 45% gain in < 2 years on billions of dollars by betting big on AAPL. If, as the fund manager, he gets 20% of those gains, he made $500m-1bn.
- adventured 10y ago
  It's his own money (~$20 billion) he plays with these days. So he kept the entire gain.
  - charlesdm 10y ago
    Must've been a good day, when he liquidated.
Unklejoe 10y ago
How do you think a potential Trump victory will affect the market, in terms of short term immediate effects? (I'm actually asking, not being sarcastic). It's hard for me to predict in this case, but if Bernie were to win, I kind of expect a temporary downturn as people panic due to Bernie's promise of attacking "wall street".
- imglorp 10y ago
  What attacks could a president perform? An R congress will plant their heels. Even attempting to clean up malfeasance and nepotism at the SEC, "the President does not possess the power to fire the appointed Commissioners, a provision that was made to ensure the independence of the SEC." https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission#Commission_members https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_C...

cm2187 10y ago

My favorite chart is to superpose the S&P for the past 10 years with the size of the Fed balance sheet. It's almost a perfect match. What is certain is that the Fed B/S isn't going up anymore (but it isn't reducing either). I don't know if we are heading toward a crash, but unless we have QE4, stocks are certainly not going up.

lujim 10y ago
Negative interest rates and company stock buy backs might be able to allow markets to keep going for a while. Negative rates cause investors and sovereign wealth funds to pour money into equities. The Bank of Japan owns 50% of the ETFs in Japan. That should scare people. Stock buy backs artificially inflate reported company earnings. Companies take on cheap debt to buy back shares of their own company (at historically high valuations) to keep investors happy and beat earnings estimates. This game of musical chairs can run for a while.
- aminorex 10y ago
  The demographic cycle compels a bottom in person ratios around 2024, but markets are front-running machines, so, no, not much longer.
- shostack 10y ago
  And analysts aren't wise to this practice? Wouldn't the market have priced in that charade already?
  - lujim 10y ago
    Everyone knows it's happening, the real question is whether it is a charade or not. Buy backs are a legitimate practice for companies that want to reward shareholders and gain a bigger chunk of their own business. Nothing sketchy there. The question is why would a company like Nike want to buy back it's own stock at historically expensive valuations rather than use that money on new products or to expand their market share? Are they doing it to gain a bigger piece of their own business, or are they doing it to juice earnings because top line sales are decreasing and they need to beat earnings expectations to keep the share price up? The jury is still out.

blisterpeanuts 10y ago

What goes up, must come down. The stock market is cyclical and a correction is bound to happen. I don't see why a Trump presidency would be bad for the market. Maybe it would take a short term dive because of his stance on protectionism, but long term it would probably rise because of his goal to repatriate dollars and stimulate domestic manufacturing. Right now, it's the uncertainty about Senate and presidential outcomes that might spook investors. Even the Supreme Court is in play. We live in interesting times.

lintiness 10y ago
anything positive about trump gets shilled to the basement on the internet, cable news, ...
- forgetsusername 10y ago
  I'm not sure about that. I think Trump gets a lot of play as a product of New York, compared to the rest of the republicans. /r/The_Donald rules reddit; often times every 5th story comes from that subreddit. These thing have contributed to his success.
  - lintiness 10y ago
    i wish i could believe you. everytime i venture to r/all, it's littered with sanders believers and their conspiracy theories.
    - digitalneal 10y ago
      Sanders believers are the new Rand Paul believers of this election cycle.
      - m0llusk 10y ago
        Hillary got to where she is today by doing well and failing in primaries and then contributing significantly to the administration and its agenda.

lujim 10y ago

To repeat the well worn quote from John Maynard Keynes. "The market can remain irrational longer than you can remain solvent." This is especially true in the post financial crisis world of financial engineering, quantitative easing, and zero/negative interest rates. This market will come down hard at some point, but shorting it has been a losing proposition 99% of the time.

tma-1 10y ago
He doesn't have to short, he can buy put options on the S&P500.
- deleted 10y ago
  [deleted]
- lujim 10y ago
  I've got put options on SPY as well as a portfolio hedge. They lose value every day (theta or the premium you pay for time) and if the S&P goes up puts lose value so fast it would make your head spin. In the end for a big liquid etf like SPY, they aren't that much different than going short. Now for small companies that could skyrocket overnight and destroy a short seller, puts offer some protection since your loss is capped at 100% instead of theoretically infinite losses. edit: I should add that puts give you leverage. To short 100 shares of SPY you would need $20000 worth of margin, while to buy 1 sept 2016 in the money put (100 shares worth) you probably only need to cough up $800. If the delta value of the put is equal to 1, your gains or losses will move inline with that 100 share short position.
  - zymhan 10y ago
    That is a very accessible explanation, thanks.
  - ikeboy 10y ago
    Another way of looking at it: Shorting is (roughly given efficient market assumptions) equivalent to buying a put and selling a call at the same strike. If the stock has no chance of going up a lot, the call will be relatively cheap, and so selling the call won't change much. Edit: on the other hand if it has low volatility in both directions, then both are cheap, and it's a bit more complicated. Buying the put will be cheaper, but shorting will also require less margin because the margin provider will have less risk. (See e.g. http://openmarkets.cmegroup.com/3785/understanding-margin-changes http://openmarkets.cmegroup.com/3785/understanding-margin-ch...). This should cancel out in theory, but might not for various reasons like transaction costs.

ikeboy 10y ago

I don't see how this article adds anything over its source http://www.zerohedge.com/news/2016-05-09/historic-150-net-short-position-carl-icahn-betting-imminent-market-collapse http://www.zerohedge.com/news/2016-05-09/historic-150-net-sh..., that article has strictly more information. Can the url be changed?

kevando 10y ago
+1
lujim 10y ago
OP was probably using Fortune as a "wrapper class" for Zero Hedge to give it some reputability. I like Zero Hedge but old Tyler Durden is a bit of a perma-bear. Although that assumes that Fortune is reputable I guess.
- ddeck 10y ago
  >Although that assumes that Fortune is reputable I guess Indeed. I'm not sure how reputable can a site be with several thousand non-staff "external contributors" producing content. I've never found anything original there and typically avoid it in search results.
  - snowwrestler 10y ago
    Are you confusing Fortune with Forbes?
    - ddeck 10y ago
      While I agree that Forbes is much worse in this regard, I was referring to Fortune: >Heeding the call for traffic growth, Fortune has joined the growing ranks of publishers that are opening up its site to posts written by non-staff contributors. Each publisher has a slightly different approach, and Fortune is no different. The Time Inc. title draws from a 5,000-person contributor network who supply what Fortune digital editor Aaron Task calls “our op-ed page.” http://digiday.com/publishers/fortune-hopes-avoid-platform-publishing-pitfalls/ http://digiday.com/publishers/fortune-hopes-avoid-platform-p...

snake_plissken 10y ago

Not a bad idea. Greece and its "debts" will rear their heads again this summer, as there are some pretty significant payments due in June and July: http://www.ft.com/ig/sites/2015/greek-debt-monitor/ http://www.ft.com/ig/sites/2015/greek-debt-monitor/. Just the spark un-needed in global markets where it seems everyone is in that pre-dive mood of complacency. The continuing question is: do you play chicken with the central banks of the world?

tinkerrr 10y ago
Closer to the US, don't forget the debt default by Puerto Rico: http://www.bbc.co.uk/news/business-36184250 http://www.bbc.co.uk/news/business-36184250
- snake_plissken 10y ago
  Excellent point, I totally forgot about that. $2 bils due July 1.

rcarrigan87 10y ago

This article feels like some pretty lazy reporting. Icahn's strategy, I'm sure is much more nuanced than - "The market will crash."

pmorici 10y ago

Not really surprising there are a lot of reasons to think there will be a market downturn the thing that seems to be a big question mark is will/can it happen with the fed's current policies.

stefap2 10y ago

"-150% Net Short Position" What does it mean?

1123581321 10y ago
For example: you have $1000, borrow another $500, and use the whole $1500 to short Apple. Icahn has a much more complex position, but essentially, he's borrowing and using derivatives to get a $1,500 return for every $1,000 drop in value.

S_A_P 10y ago

Icahn thinks the market will crash, enters a short position. Then lobbies the media to help it crash.

golergka 10y ago
Is there evidence of active lobbying, ie making media do what they wouldn't do on their own of they pursued interests of their readers? Because this story in particular seems like an honest, interesting story by a good journalist.
shostack 10y ago
I wonder how much the media practically begging for it to crash could create a self-fulfilling prophecy.

ddeck 10y ago

He may well be right. If you say it often enough, eventually you will be. 2011: >You’ve got to be myopic if you’re not at least concerned that there might be a major correction [1] 2013: >Activist investor Carl Icahn on Monday said there was a chance the stock market could suffer a big decline, saying valuations are rich and earnings at many companies are fueled more by low borrowing costs than management's efforts to boost results [2] 2014: >Carl Icahn says 'time to be cautious' on U.S. stocks [3] >Carl Icahn Reiterates "We Are In A Major Asset Bubble" [4] 2015: >Icahn warns of potential looming catastrophe...Icahn said he's "more hedged now than I've been in years." [4] [1] https://next.ft.com/content/c9612302-4c09-11e0-82df-00144feab49a https://next.ft.com/content/c9612302-4c09-11e0-82df-00144fea... [2] http://www.reuters.com/article/us-investment-summit-icahn-idUSBRE9AH11720131118 http://www.reuters.com/article/us-investment-summit-icahn-id... [3] http://www.reuters.com/article/us-investing-icahn-exclusive-idUSKBN0FF2DV20140710 http://www.reuters.com/article/us-investing-icahn-exclusive-... [4] http://www.zerohedge.com/news/2014-08-12/carl-icahn-reiterates-we-are-major-asset-bubble http://www.zerohedge.com/news/2014-08-12/carl-icahn-reiterat... [5] http://www.cnbc.com/2015/09/27/-of-potential-looming-catastrophe.html http://www.cnbc.com/2015/09/27/-of-potential-looming-catastr...

11thEarlOfMar 10y ago
Meanwhile, the S&P Increased 65%. (2011 ending @ ~1257)
UVB-76 10y ago
If the implication is that his statements in 2011 and 2013 were predictions that turned out to be false, I don't think these quotes are sufficient evidence. That an inevitable correction has been delayed by sustained government efforts does not make predictions of a correction any less prescient.
- greeneggs 10y ago
  It is hard to call prescient or insightful a model of the economy that doesn't take into account government actions.
- 10y ago

11thEarlOfMar 10y ago

The analysis needs to factor overall market earnings [1]. It is more level-headed to look at the S&P 500 P/E ratio, which does show a historically over-valued market, though not dramatically over-valued at this time [2]. S&P 500 overall earnings hit all-time highs in 2013 and 2014, but have fallen back somewhat in 2015. So it's a pretty safe bet to short, if that is one of your investment tools. But I don't think you'll really make a killing, unless earnings decline substantially. I've chosen to just divest stock-based investments and increase cash somewhat, and then cherry-pick value in dividend stocks. [1] http://www.multpl.com/s-p-500-earnings/table http://www.multpl.com/s-p-500-earnings/table [2] http://www.multpl.com/ http://www.multpl.com/

marincounty 10y ago

"In April, Icahn argued that stock prices have been pushed artificially high by low interest rates, but that economic fundamentals could not support those prices." Along with Druckenmiller. Then, I hear Willie Brown is concerned about what San Francisco is going to do with thousands of unemployed computer programmers. The top two arn't lightweights. Don't we all kinda look at all that free money the rich have played with, and wonder what's up? I look at my cd, and I made $9 dollars. It seemed like a few years ago I made $350? I look around and don't see this great economy? I see a few hot spots, and a huge swath of people just getting by. I see too many people who just gave up. (I don't want to argue. The Bulls are probally right. I'm always wrong on predicting a crash.)

Matt_Mickiewicz 10y ago

He may be onto something. There's a huge and widening gap between GAAP vs. Non-GAAP earnings: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/02/24/S%26P%20PE%20GAAP%20non%20GAAP_0.jpg http://www.zerohedge.com/sites/default/files/images/user5/im... U.S. corporations have issued more than $9.9 trillion in debt since 2008. Last year, corporations issued a record $1.5 trillion in debt. 76% of the companies in the S&P 500 bought back their own shares ...most companies used debt to pay for these buybacks, in a clever move of financial engineering to boost EPS. To top it off, we've been in a multi-quarter earnings recession for the S&P, and total retail sales growth has dipped below 3% which has always correlated with a recession: http://i0.wp.com/bawerk.net/wordpress/wp-content/uploads/2016/04/Retail-Sales-since-1968-w-recession-threshold.jpg http://i0.wp.com/bawerk.net/wordpress/wp-content/uploads/201...

tostitos1979 10y ago
The stock market seems sane when compared to real-estate prices in major cities. In Canada, people are mostly pointing fingers at foreign buyers. People are generally ignoring the elephant in the room - lowest rates in a generation. Despite being in the 1% of wage earners, we personally are so badly screwed ... we'll never be able to afford property in hour home towns unless there is a 50% crash. I don't think that is likely at all ... so we're (and most of our friends who missed the buying opportunities of 2011-12) are figuring our what remote town to move to so we can earn some fraction of our salaries but have a shot at home ownership. As rational people, we know we cannot afford million dollar homes if interest rates ever normalize. In Canada, you cannot get mortgages longer than 10 years ... so it is very grim for us. People who don't know math are raking it in while we are suffering in no uncertain terms. But no one seems to care.
- mttddd 10y ago
  I am just hoping self driving cars come out in the next 5-10 years and hopefully that expands the geographic area you can reasonably live in and still commute to work.
  - 10y ago

yonibot 10y ago

To badly paraphrase the words of Jack Bogle - "I don't know anyone who can successfully time the market, and I don't know anyone who knows anyone who can either."

jobu 10y ago

"In April, Icahn argued that stock prices have been pushed artificially high by low interest rates, but that economic fundamentals could not support those prices." That tells me that his bet is actually that the Fed will keep raising rates, which would likely push down stocks.

MicroBerto 10y ago

One thing not yet discussed here is the demographic profile of the US: Baby Boomers are now retiring. Over the next 20 years, they will be drawing down on their retirement accounts, putting slow yet constant negative pressure on the market. Japan has had similar pressure and it is one thing that contributed to the Lost Decade.

__derek__ 10y ago
I wonder what kind of effect that will actually have, given the stark divide in retirement preparations. On the one hand, we have a lot of people who have little retirement savings, who play a small role in the markets and will delay retirement (or just never do it). On the other, we have some people with well-planned retirement accounts. I would not be surprised if a fair number of the latter have planned to live only on the proceeds of their investments. That will introduce some bias towards dividends over reinvestment, I suppose. This is speculative, granted.

nikdaheratik 10y ago

The guy is quotable, but I don't understand why anything Icahn says about the market is actually newsworthy. He never says or does anything that isn't about benefiting the interests and net worth of Carl Icahn (inc.). May as well be quoting press releases from SCO lawyers about software patents and Unix.