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Billionaires Dumping Stocks, Economist Knows Why

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Sunday, 16 Sep 2012 12:44 AM

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.

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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.

Read more: Billionaires Dumping Stocks, Economist Knows Why

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    Total 10 comments
    • EternalOptimist

      More important than the dump – is where are they putting their money? My guess would be they found something more stable, predictable and more lucrative than those stocks.

      • Decode the World

        Something more predictable and lucrative than those stocks….like gold and silver?

        • Fake-it

          I am a technical analyst, and yes, there is a tsunami coming.
          Expect 40 to 50% correction.
          Gold and Silver will take a SEVERE beating as well.
          Don’t believe those who are peddling those metals.

        • Thomas

          hey guys….would it be a good time to jump in after the correction? What companies will fall then go back up fast?

        • Bigrsoul

          Hey Philippinobob, you are correct about gold and silver taking a severe beating BUT it will only be in the PAPER market not the physical. The US dollar is finished.

    • Anonymous

      Massive market correction, as much as 90%.Yeah,right.The American dollar is dropping so fast that companies are scrambling to sell their products,even if it means selling for(Gasp!)actual market price.This insider secret must have leaked out to a few cousins because I just saw a crap load of cheap beef products being given away,whilst we are supposedly in the worst corn shortage ever.This will be seen by these “fake ass” analysts as a recovery when it really a currency exchange.I suspect fiat money for tangibles(Real Estate,Gold,Silver,Platinum,Copper,ect).The name News Max says it all…Disinfo channel No.1. :roll:

      • Ranger_Ric

        The reason you are seeing cheap pork and beef products is because there was a massive selloff last month by producers. The cost of feed is going through the roof so farmers and ranchers sold like crazy and flooded the market. It will go way, way up from this point forward.

    • Anonymous

      OK, most of your don’t know this…

      You can “hold” a stock long term…called “going long”…90% of all “investors” only do this.

      The rest of the 10% use your ignorance of the mechanism which requires more money to play, called a “margin” account….where you can pick any stock and “sell” it before you buy it…called “shorting”.

      So when you sell the market see-saw…the top 10% are making money on the way up, and on the way down….

      Whaaaa???? Most of you are saying….yes, the market makers and brokers “lend” the stock that you “little chumps” buy long…to the margin accounts who “bet short”…driving the index down and then they dump it by offering it back (buying)….confused yet?

      You say “hey wait a gosh darn minute, that just sounds like a made up game and like only osme get to really know how to play…?

      Yep. Chaaaaaa—ccchiiiinnnnnnnng!!!!!! You lose again. ;)

      Keep listeing to those “inside” stock tips and buy “solid” long….and do the same for commoditites…especially “gold”…’cause you know when TSHTF we all just salivate for the taste of gold…hmmmmm, ummmm!

      Gold can be fried, boiled, sautee’d (my favorite…lil’ butter, wine & mushrooms) or fed directly in flake to babies…most bottle nipples need a little help with the opening…

      Do something constructive. Write your a__hole congressmen, post your letters, march at every chance and tell eveyone who will listen.

      Those in the military, remember your oath to the Constitution, you can always get another paycheck…if there is still a country left. If you obey your bosses and commanders, you are all war criminals…helping us all to die….

      And I don’t think any human, or God will take that lightly…you shouldn’t either….do the right thing…disobey and let’s stop this from happening!

    • Anonymous

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    • Cosmic Charlie


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