Thursday, April 11, 2013

Billionairs Dumping stocks‏


Last year Warren Buffett predicted there would NOT be another recession.  I told you Warren Buffett doesn’t know what he was talking about.  Warren must have read that email because he is now dumping stocks at a record pace. 
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. If Warren read any of my 10,000 Tylenol sucks emails that I have been sending out since 2009 he wouldn’t be so disappointed in Johnson and Johnson.  He would have run to the exit on that stock years ago.  Too bad he wasn’t paying attention. 
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.
 
I say stuff and nobody cares.  Buffett says stuff and everybody sits up and takes notes.  The only difference is I am right years before Buffett figures it out. 
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%.

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