Here are excerpts of what Carl Icahn is saying:
[High-yield bonds] are being sold en masse to the public, just as the mortgage-backed securities were… We don't know what's going to happen. You don't know how bad the end of this is going to be. You do know, though, that when you did it a few years ago, it caused a catastrophe. It caused …
"High-yield" really stands for "junk" bonds. People are buying these not really understanding what they're buying. And if you just look at the numbers, they are amazingly risky. You have $2.2 trillion in junk bonds, up $1 trillion [from five years ago]. That's a helluva lot…
I will tell you this… I've seen this before a number of times. I've been around a long time. I saw it in '69, '74, '79, '87, and then 2000 wasn't pretty. And I think a time is coming that might make some of those times look pretty good.
It's just déjà vu. The public got screwed in 2008. They're going to get screwed again. I think it was Santayana [the Spanish philosopher] who said: "Those who do not learn from history are doomed to repeat it." And I am afraid we are going down that road.
The bond market in the US alone is around $39 trillion dollars which is about the 1.5 times bigger than the stock market. Generally speaking, most public entities do no invest in other companies shares, but they will invest in a broad array of debt products. The point being is if there is a massive selloff or crash in the bond market, liquidity is going to be a really big issue. Investors will be unable to unload or selloff their depreciating bonds. No one will be able to get out of the market!
If you hold retirement savings plans in bond heavy ETF's or generally hold a lot of bonds I truly believe it's time you talk to your financial planner or at least do your own due diligence and research the heck out of the crazy markets we've been getting lately.
As for me, I'm selling a large portion of my bond portfolio so I will have a lot of cash in hand ready for a price drop in quality bonds. I will still keep a portion in order to keep receiving the interest payments as cash flow. Another great insurance against a market crash is to invest in physical gold. Always be prepared when dealing with your investments for your future and hope you don't endure another catastrophe like the one in 2007-2008.
***I'm no financial adviser and I can only speak of my own experiences and the names listed above are not endorsements but a source of information to help me give a broad view of what I want to learn.