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Fund protege of Carl Icahn: Invest in companies you believe in and leave stock trading to computers

Key Points
  • Keith Meister, founder of Corvex Management, advises stock investors in these tumultuous times to "do what you do really well."
  • Meister counts himself among investors who aim to "buy businesses in the form of public stocks" for the long haul.
Hedge fund titan Keith Meister on the market sell-off

Keith Meister, founder of Corvex Management, advises stock investors in these tumultuous times to "do what you do really well."

"Everyone has different skill sets," said Meister, formerly CEO of billionaire Carl Icahn's investment firm. "There's people who are going to make a lot of money trading the market [short term]. There's people who are going to make a lot of money having duration" — investing for the long term.

At Corvex, Meister puts himself among the latter, saying he aims to "buy businesses in the form of public stocks." But as an activist investor, he said, he not only picks companies he believes in, he looks to partner with companies to make them better.

"I generally believe, if you don't have an edge in the public markets, something that you can do better, you're probably going to be replaced by a computer at some point," he said on CNBC on Thursday. "There's more and more of the market and the trading that'll be done by the quantitative players."

Later, on CNBC's "Fast Money Halftime Report," billionaire investor Leon Cooperman blasted the Securities and Exchange Commission for failing to address the negative impact computer trading. The Omega Advisors founder said, "These algorithmic, trend-following models … wreak havoc with what has, up to now, been the best capital market in the world."

Cooperman and Meister appeared CNBC as Wall Street was nosediving again. The Dow Jones Industrial Average was sinking about 3 percent at its worst levels Thursday. On top of a similar plunge Tuesday, the Dow was seeing a two-day loss of more than 1,400 points at one stage. The Dow and dipped in and out of correction territory. The Nasdaq fell further into a correction.

"In the short term — when you have China one day good, one day bad — everything is going to act together, but I think that will settle out. And we're going to have a fundamental-based period of winners and losers," Meister said on "Squawk Box" as futures prices sank before the market open.

Meister said China's unfair trading practices need to be addressed. "We probably kicked the can too long." He praised President Donald Trump for taking on the fight to reset relations, and he predicted an eventual deal. But he acknowledged, "It's very hard for the public markets to watch the sausage getting made."

As for interest rates, Meister encouraged Federal Reserve Chairman Jerome Powell to be mindful about choking off economic growth with too many interest rate hikes.

The Fed is expected to a rate hike on Dec. 19, its fourth this year. After its September rate increase, the Fed was also projected to hike three times next year. Though with the market plunging and concerns about a possible economic slowdown there's debate if that 2019 number still holds.

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