Billionaires Dumping Stocks, Economist Knows Why

[thatGuy]

From Moneynews

   
 
Moneynews
Billionaires Dumping Stocks, Economist Knows Why
Wednesday, August 29, 2012 05:33 PM
By: Newsmax Wires

Despite the 6.5% stock market rally over the last three months, a handful of billionaires are quietly dumping their American stocks . . . and fast.

Warren Buffett, who has been a cheerleader for U.S. stocks for quite some time, is dumping shares at an alarming rate. He recently complained of ?disappointing performance? in dyed-in-the-wool American companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods.

In the latest filing for Buffett?s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in ?consumer product stocks? by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

With 70% of the U.S. economy dependent on consumer spending, Buffett?s apparent lack of faith in these companies? future prospects is worrisome.

Unfortunately Buffett isn?t alone.

Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the second quarter of the year, Paulson?s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase. The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.

Finally, billionaire George Soros recently sold nearly all of his bank stocks, including shares of JPMorgan Chase, Citigroup, and Goldman Sachs. Between the three banks, Soros sold more than a million shares.

So why are these billionaires dumping their shares of U.S. companies?

After all, the stock market is still in the midst of its historic rally. Real estate prices have finally leveled off, and for the first time in five years are actually rising in many locations. And the unemployment rate seems to have stabilized.

It?s very likely that these professional investors are aware of specific research that points toward a massive market correction, as much as 90%.

One such person publishing this research is Robert Wiedemer, an esteemed economist and author of the New York Times best-selling book Aftershock.

Editor?s Note: Wiedemer Gives Proof for His Dire Predictions in This Shocking Interview.

Before you dismiss the possibility of a 90% drop in the stock market as unrealistic, consider Wiedemer?s credentials.

In 2006, Wiedemer and a team of economists accurately predicted the collapse of the U.S. housing market, equity markets, and consumer spending that almost sank the United States. They published their research in the book America?s Bubble Economy.

The book quickly grabbed headlines for its accuracy in predicting what many thought would never happen, and quickly established Wiedemer as a trusted voice.

A columnist at Dow Jones said the book was ?one of those rare finds that not only predicted the subprime credit meltdown well in advance, it offered Main Street investors a winning strategy that helped avoid the forty percent losses that followed . . .?

The chief investment strategist at Standard & Poor?s said that Wiedemer?s track record ?demands our attention.?

And finally, the former CFO of Goldman Sachs said Wiedemer?s ?prescience in (his) first book lends credence to the new warnings. This book deserves our attention.?

In the interview for his latest blockbuster Aftershock, Wiedemer says the 90% drop in the stock market is ?a worst-case scenario,? and the host quickly challenged this claim.

Wiedemer calmly laid out a clear explanation of why a large drop of some sort is a virtual certainty.

It starts with the reckless strategy of the Federal Reserve to print a massive amount of money out of thin air in an attempt to stimulate the economy.

?These funds haven?t made it into the markets and the economy yet. But it is a mathematical certainty that once the dam breaks, and this money passes through the reserves and hits the markets, inflation will surge,? said Wiedemer.

?Once you hit 10% inflation, 10-year Treasury bonds lose about half their value. And by 20%, any value is all but gone. Interest rates will increase dramatically at this point, and that will cause real estate values to collapse. And the stock market will collapse as a consequence of these other problems.?

See the Proof: Get the Full Interview by Clicking Here Now.

And this is where Wiedemer explains why Buffett, Paulson, and Soros could be dumping U.S. stocks:

?Companies will be spending more money on borrowing costs than business expansion costs. That means lower profit margins, lower dividends, and less hiring. Plus, more layoffs.?

No investors, let alone billionaires, will want to own stocks with falling profit margins and shrinking dividends. So if that?s why Buffett, Paulson, and Soros are dumping stocks, they have decided to cash out early and leave Main Street investors holding the bag.

But Main Street investors don?t have to see their investment and retirement accounts decimated for the second time in five years.

Wiedemer?s video interview also contains a comprehensive blueprint for economic survival that?s really commanding global attention.

Now viewed over 40 million times, it was initially screened for a relatively small, private audience. But the overwhelming amount of feedback from viewers who felt the interview should be widely publicized came with consequences, as various online networks repeatedly shut it down and affiliates refused to house the content.

?People were sitting up and taking notice, and they begged us to make the interview public so they could easily share it,? said Newsmax Financial Publisher Aaron DeHoog.

?Our real concern,? DeHoog added, ?is the effect even if only half of Wiedemer?s predictions come true.

?That?s a scary thought for sure. But we want the average American to be prepared, and that is why we will continue to push this video to as many outlets as we can. We want the word to spread.?

Editor?s Note: For a limited time, Newsmax is showing the Wiedemer interview and supplying viewers with copies of the new, updated Aftershock book including the final, unpublished chapter. Go here to view it now.

? 2012 Moneynews. All rights reserved.

[JohnyMac]

Bump...

[special-k]

Yup, it's time to turn any extra dollars into anything else but dollars.  (Un)fortunately, I don't have any extra dollars.

[mountainredneck2051]

i just sold off all my exxon stock 
i'm gonna invest that shit in the 3 b's

[Kentactic]

I knew this being poor thing would pay off. My sunday is still open. Have fun exchanging your money for gold n silver this weekend suckers!!

..... 

[EJR914]

Great article, TG.  I need to send that one to my father, who is still in a tad of denial about how bad an economic adjustment could be.  The truth is this adjustment has been coming for a very long time, and you cannot deny the natural laws of economics, even if the government thinks they can control and command the economy, eventually, you will have to pay the piper.  Its going to be ugly.  When you bailout and support failures, there is NO LIMIT to the cost.  We are so far from a free Laissez-faire economy in this country its not even funny.  We haven't even been a capitalist economy in over 100 years.  We'll be paying for all of this very very soon I have a feeling.

[JohnyMac]

I wanted to think about the article you posted That Guy before I responded. Here's my thoughts:

1) The stock market is going to collapse as it is way over valued. Its over valued because of Quantitative Easing and major
    corporations not reinvesting capital in their own business.

    I got out of the stock market (All but 15% of my retirement) in 2008 just before and during the last collapse. My financial
    analyst is bugging me to reenter the market in the 30% range. Her reasoning is that Bernanke is going to do another QE and
    this will drive the market up. She is correct however at what cost? Inflation? Recession? Total collapse of the market? The
    higher the mountain the farther you will fall.

2) Europe is being propped up by not only the Germans but the old US of A behind the scenes. We are on the brink of collapse
    here in the old US of A and we are helping Europe. That sure makes sense.   

3) India and China are outright buying up every ounce of gold they can get their hands on. Their is speculation daily that the US
    dollar will be replaced at any time as the world currency. This is very bad VERY BAD for the United States!

Ladies and gentleman, if you have been half-hardheartedly prepping now is the time to put the pedal to the metal! DO NOT have any money in the bank other than what you need to pay your current bills. DO NOT go out and buy a shit-ton of stuff on your credit card. The credit card companies will come after you post collapse to get their money back. This is a tool that the government will use to imprison you with velvet gloves.

I hate so sound like Chicken Little here however don't you feel it? Don't you feel that things are starting to collapse around us?

> Half the corn harvest is ruined due to the drought
> The Middle East is a powder keg with new things happening every single day
> Big time investors pulling out of the markets
> Big time investors moving from the US to countries they feel are more business and tax friendly
> Our President acting so cool and not interested is what is going on
> We are saying good-by to more and more liberties
> New government agencies...Plus they are being armed
> Very few folks in the media, whether you watch Fox or ABC raising a yellow flag here for caution
> What else am I missing here?

Sorry for the rant folks. I just get frustrated when we can clearly see what is coming at us and our neighbors and relatives think we (I) are (am) crazy.
     

[Grudgie]

Honestly, People don't think we that crazy anymore. It is common to see people buy a little extra ammo to 'put away'. And it is perfectly acceptable to store a little extra food now days. We are slowly becoming more and more mainstream.

[EJR914]

Honestly, People don't think we that crazy anymore. It is common to see people buy a little extra ammo to 'put away'. And it is perfectly acceptable to store a little extra food now days. We are slowly becoming more and more mainstream.

Yep, you got it man.  No doubt about it.  Prepping is much more mainstream now that it was just a few years ago.  I'd say the last two decades maybe.

[thatGuy]

My Grandmother asked me about prepping today... She lived though the *first* Great Depression and doesn't want to replay the events of her youth at her age.

It scared the shit out of me.

[EJR914]

Fear is a good thing
It teaches us humility
-Moe, Plane Crash

Fuck yeah!  I'll go off-topic and post the fucking video link just because...  Old as fuck music, and crazy as hell...

moe. - Plane Crash