Carl Icahn Compares The Market To A 'Casino On Steroids'

The stock market is full of multiple "fault lines" that will ultimately lead to an "earthquake on Wall Street," according to Carl Icahn, one of Wall Street's biggest names and founder of Icahn Enterprises LP IEP.

Icahn thinks the market can recover from the current woes and will "probably bounce back." But one day the stock market, which is akin to "a casino on steroids," will "implode."

A Little Rumbling

Icahn, a notable activist investor, said during a CNBC interview Tuesday he believes there's a place in the stock market for long-term investing and when appropriate, activist campaigns. But he also questioned what role triple leveraged exchange-traded funds and other complex exchange-traded notes play in the market.

For example, the Credit Suisse VelocityShares Daily Inverse VIX Short Term ETN XIV is designed to be a bet on a calm market, but when the markets sold off heavily over the past few days the exchange-traded note dropped more than 80 percent. As a result, the ETN was halted Tuesday and will soon be liquidated.

As worrisome as it sounds, and some investors have lost millions of dollars, Icahn said this is just "a little rumbling, a little fault line."

"One day this thing is going to implode because you have too much leverage and too many people buying these things and Wall Street sells them these products," Icahn said. "I have been saying for a long time. It's extremely dangerous."

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