Carl Icahn says he expects stock markets to bounce back after the massive sell-off Friday and Monday, while warning that current market volatility is a harbinger of things to come.
“This is just a little rumbling, a little fault line,” Icahn told CNBC in an interview Tuesday. “Before the earthquake, you get the rumblings and then maybe you don’t have an earthquake for 20 years, or 10 years, or five years. But these are the rumblings.”
The billionaire investor said markets will get some help from a healthy economy, including strong fundamentals for U.S. corporations that include the new tax benefits taking effect this year.
The volatility of recent weeks is cause for concern, Icahn said, adding that he doesn’t remember a two-week period as turbulent as this one. He said the problem is that too much money is flowing into the index funds, where investors don’t know what they’re actually investing in.
“Passive investing is the bubble right now, and that’s a great danger,” he said.
Eventually, that will implode and could lead to a crisis bigger than in 2009, he added.
“When you start using the market as a casino, that’s a huge mistake,” Icahn said.