Billionaires Dumping Stocks, Economist Knows Why

newsmax ^ | 2-26-2015

[Citizen Zed]

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.

Buffett’s holding company, Berkshire Hathaway, 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 its 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. Paulson’s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase according to a recent filing. The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.

Finally, billionaire George Soros has 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?

[Toddsterpatriot]

http://www.theguardian.com/business/2014/oct/29/us-federal-reserve-end-quantitative-easing-programme

[Hugin]

Thanks. Wouldn’t surprise me if they start again though. The other alternatives, massive cuts or massive tax increases are politically or economically implausible, so monetization remains the only viable options. Well, other than outright default.

[Toddsterpatriot]

The other alternatives, massive cuts or massive tax increases are politically or economically implausible, so monetization remains the only viable options.

There is no shortage of buyers for Treasury issues, none of your options are urgent.

[PLMerite]

“Always liked her on The Gong Show.”

She’s 83 years old now and has been married to the same guy for 60 years.

[CitizenBob]

A hard headed Chicago prosecutor once said to find out why a crime is committed and by whom, follow the money trail.

Newsmax printed the article with a video imbedded to open a several year old video / transcript (2013 is in the future) to sell a package of products & subscription.

Who profits from the products? Well, one of the 5 is a Newmax principle & editor in chief...

[newbie 10-21-00]

Chuck Barris was the host. Gotta love The Unknown Comic and Gene, Gene the Dancing Machine

[Toddsterpatriot]

She’s 83 years old now and has been married to the same guy for 60 years.

Laz would hit it.

[SkyPilot]

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

90% is the worst case scenario, but think how fictitious and false the current Stock Market really is. It is at 18,000 because $4.5 Trillion was "created" out of thin air and "invested" in this monster.

Real productivity, manufacturing, and employment is a mess. People only put Trillions into the markets because rates were so low they didn't want to put it into safer investments.

Real, physical gold cannot almost not be found. Millions of investors have pieces of paper that claim they own real gold......somewhere. It's.....right.....over there.

There will be blood on the walls after this next coming crash. It will be nothing like the nation and the world has ever seen.

[bobby.223]

Remember her classic comment to Chuck after ‘The Popsicle Twins’ finished up there act?

[Rodamala]

The crash will be held off until December 2016... and itbwill be Bush’s fault all over again.

[Rodamala]

Hot Stock Tip: B&G Foods [NYSE:BGS] is a good value right now. Pays a decent dividend and the company has a business model of gobbling up trusted but neglected brand staple food items. Specifically, they repackage these items to be able to priced for the shelves of Dollar Stores... which I see more and more being built. I don’t see a majority of the middle class dining on Porterhouse Steaks and Lobster Tails every week... but I do see them buying potted meat... It’s the last resort on the way to Cat Food on Saltines.

[Zhang Fei]

Hot Stock Tip: B&G Foods [NYSE:BGS] is a good value right now. Pays a decent dividend and the company has a business model of gobbling up trusted but neglected brand staple food items. Specifically, they repackage these items to be able to priced for the shelves of Dollar Stores... which I see more and more being built. I don’t see a majority of the middle class dining on Porterhouse Steaks and Lobster Tails every week... but I do see them buying potted meat... It’s the last resort on the way to Cat Food on Saltines.

I like the idea. IMO, dollar stores are gaining in prominence, not so much because people are getting poorer (incomes are up but people are spending money on stupid things like Starbucks coffee and expensive smartphone and cable TV packages), but because gasoline prices were, until the past few months, very high, making it less affordable to trek to the Walmart for a quick errand several times a week. The other thing is dollar stores have replaced the five and dime, as pharmacy behemoths like CVS and Walgreens have acquired rivals and jacked up convenience store pricing, and are competitive with Walmart even if you just consider the gasoline savings and ignore the time spent getting to Walmart, finding parking, and waiting on long lines.

The problem with BGS specifically, however, is that it's in hock to the gills. A small company like that ought to be issuing stock to fund some of its acquisitions. Its debt to equity ratio is higher than Kraft's, but its products have nowhere near the brand recognition of Kraft products. The risk is that it will be squeezed by the big dollar store chains, which are consolidating (e.g. Dollar Tree just bought Family Dollar, and 99 Cents Only's PE owners are probably looking for a buyer), and run into cash problems.

[cherry]

shouldn’t Paulson be in a cell someplace?