by Newsmax Wires
09 May 2013
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,
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.
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.
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.
George Soros recently sold nearly all
of his bank stocks, including shares of,
Between the three banks, Soros sold more than a
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
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
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
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.”