Newsmax Wires: “Billionaires Dumping Stocks, Economist Knows Why” – Money News

Posted on :Jan 04, 2014

By: Newsmax Wires

Money News

January, 3, 2014

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.

  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.”

  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.”

Gold Goliath is not your typical gold dealer.

Visit Us On FacebookVisit Us On TwitterVisit Us On Google Plus