Billionaire activist investor Carl Icahn told cable television network CNBC on Wednesday that he would recommend investors hold cash given market risks and that he was considering buying “a lot more” shares of Apple Inc.
“I’m very seriously considering buying a lot more of it.” Icahn owned about 53 million shares of Apple at the end of the second quarter.
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The Wall Street veteran warns that stock prices and corporate earnings have been propped up by an overly generous Federal Reserve pumping billions of dollars into the financial markets using crisis-era monetary policy.
“I would say keep cash, ” Icahn said “You’re only making 1 percent on your cash – what’s better? Making 1 percent or losing 30 percent?, ” he said.
Icahn said retail investors had a false sense of security about how easy it would be to sell their holdings of such debt if the market turns. He said the current rate environment is “building bubbles”.
“The irony of lower interest rates is while you think it’s going to help create jobs, it’s not happening”, Icahn said.
Stock buybacks drive up the value of the stock by limiting its supply. Over the same period, average corporate investment as a share of assets has declined.
Greater worker input would likely lead to higher wages, which would drive companies to boost productivity – whose lackluster growth Icahn emphasized.
Icahn asked policymakers to allow USA companies to bring back an estimated $2 trillion in cash stored overseas by lowering taxes they would otherwise be charged on that money.