We're Heading to a Cliff - 2007 déjà vu

Carl Icahn has been in the news and has made a fifteen minute video where he warns the markets, the economy and investors are heading to a cliff.

His message: "It's 2007 all over again."

Less than 15 minutes in length, pay close attention at the 11 minute mark.

Icahn describes how investors buy investments that pay "high yields" because they can't get income.  High Yield Bonds used to be called Junk bonds.

But what Icahn describes about investors is highly accurate and the problems he predicts are very real.

Icahn takes swipes at Wall Street, politicians, the Fed, and specifically names Black Rock, the largest provider of Exchange Traded Funds.

The most serious claim that investors must consider is that the markets can turn into a disaster when everyone runs for the exits like a panic inside a movie theater.

You want to get out - but you can't.  Chaos ensues and most people get stuck because they can't get out.

With investments the markets get locked and no one will buy what you want to sell.  The best price you can find is next to nothing.

This is called loss of liquidity.   Icahn says the money management guys act as if there is liquidity.  At least that's what they convince you to believe.

But, again, what happens when everyone wants to sell at the same time?

The party bus goes over the cliff.

  See www.carlicahn.com

Patrick Broderick