Getty ImagesExtremely overheated markets worry billionaire investors Charles Icahn. (Photo by Michael Nagle/Getty Images)Activist investor Carl Icahn took to Twitter and CNBC Wednesday to issue a stark warning to investors: “I think the public is walking into a trap again as they did in 2007,” Icahn told CNBC. Specifically, the 79-year-old investor warned of a bubble in high-yield debt. The prominent investor joins a chorus of voices pointing at frothiness in the so-called junk-bond market, including DoubleLine Capital founder Jeff Gundlach. In two tweets published on Wednesday, Icahn cautioned against listening to so-called permabulls, saying the 2008 crisis might have been avoided if more investors had warned about the risk of a bubble in 2007, as he is attempting to do now. On Monday, Los Angeles-based bond fund manager Jerry Cudzil, head of U.S. credit trading at TCW Group, told Bloomberg that he is also building up a big cash stockpile to brace for a bond-market selloff. This isn’t the first time Icahn has sounded alarm bells. In early May, Icahn warned that “when [high-yield bond funds] start coming down, there is going to be a great run to the exits.” The selloff may have already started. S&P Capital IQ reported that investors withdrew $2.9 billion from high-yield funds for the week ended June 17 — the biggest redemption in six weeks — on top of another $2.6 billion that pulled out the week before. S&P Capital IQInvestors removed $2.9 billion out of high-yield funds for the week ended June 17, on top of $2.6 billion the week before. Ultraloose monetary policy underpinned by razor-thin interest rates has been the main driver of investors into so-called junk bonds, which promise to offer richer yields than, say, Treasurys. But the risks in junk debt also are much greater than the typical, higher-quality government bonds. “The yield advantage over high-quality bonds remains significant and stands out in a low-yield world,” said Antoni Valeri, Investment Strategist for LPL Financial, in a research note. But yield differentials, known as spreads, between high-yield bonds and Treasuries have contracted over the first half of 2015. This suggests that yield-starved investors are taking higher risks for lower returns. The average yield spread remains near 4.5%, a level that has halted further improvement among high-yield bonds in the past, Valeri said. LPL ResearchAs measured by the Barclays High Yield Bond Index and five-year Treasury yield, the average yield spread remains near 4.5%. DoubleLine’s Jeffrey Gundlach also warned earlier this year that as interest rates are expected to rise, “the quest for yield will cool down, because that is what’s driving a lot of investment activity.” For that reason, at a private event on May 5 in New York, Gundlach advised investors to sell high-yield bonds and buy Treasurys, as they prepare their portfolios for the first interest-rate increase in nearly a decade. MarketWatch