# What do you think about this, Should we worry?



## Dixie (Sep 20, 2010)

Billionaires Dumping Stocks, Economist Knows Why

Thursday, 08 Aug 2013 11:49 PM

By Newsmax Wires
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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.


http://w3.newsmax.com/a/aftershockb/video47b.cfm?promo_code=110D8-1


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## BillS (May 30, 2011)

It's definitely a sign of bad things to come. Wiedemer is wrong about the created money not hitting the economy. The Fed has been buying municipal bonds and funding the federal government's trillion dollar deficit by creating money out of thin air. The most serious problem in my opinion is the 400 trillion dollars in interest rate derivatives that will blow up the world's financial system once interest rates go high enough. Most likely we'll wake up to a world financial crisis where nobody knows how to fix it and all the money in all the banks will be gone. If you have a 401k, take the money out, pay the penalties. It's better than losing it all.


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## Tweto (Nov 26, 2011)

I have been reading similar articles for the past few months. What they are not saying is that after they are selling their stocks they are keeping their money in cash (very strange).

The times we are in now are completely unique to any other time in human history. This is a prime example of the frog in the slowly heated water only the water has just started to boil. If you were transported here from the 70's or 80's or 90's and found the fed pumping money into the economy (I mean banks) and seen the general economy struggling and the markets at all time highs and an administration that was anti-business and anti-american and pro socialist, you would be getting ready for the stuff to hit the fan. If you can't see whats going to happen you need a therapist to help you.

Back to the OP, yes we need to be worried and I think that the next 3-6 months will tell us allot about the future 5-10 years.


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## bacpacker (Jul 15, 2011)

Simple case of selling high after buying low (08-09), in preperation for buying low again. And yes they are sitting on their cash, just waiting for buying opportunities.

Gives them the ultimate control when things get really bad and people will almost give their stuff away just to get a meal.


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## Marcus (May 13, 2012)

For those of you who haven't read *Aftershock* (which I strongly recommend reading to understand where we are and where we're going), Wiedemer suggests we'll see rampant inflation along the lines of the late 70s/ early 80s. He believes all asset classes except PMs will suffer greatly as a series of bubbles in the economy are deflated. The last and largest bubble which BillS alludes to is the government debt bubble. Even Wiedemer foresees an eventual crash in PMs, but only after the earthquake in the world's economy.


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## BillS (May 30, 2011)

If I remember right the Aftershock author saw 100% annual inflation. Sure, that's bad, but it wouldn't lead to widespread starvation.

The inflation that we're going to see is going to be like Weimar Germany. Germany's prices increased 10 fold every month. Imagine a loaf of bread is $2, then $20, then $200, then $2000, and so on. There will be widespread hunger once a cart full of groceries costs $1,000 instead of $100. Few people would have that kind of money for very long.


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