The last earnings season was bad prompting Warren Buffett to refer to stocks like Johnson & Johnson, Kraft Foods, and Procter & Gamble as having “disappointing performance”.
In the latest filing from Berkshire Hathaway, Buffett and company have dumped 19 million shares of Johnson & Johnson and has reduced his total position in consumer product stocks by a shocking 21%! (Source: Buffett’s Berkshire cuts stakes in J&J, Kraft, P&G)
Warren Buffett is not the only billionaire to dump U.S. stocks. According to the latest filing from John Paulson’s hedge fund, Paulson and company dumped 14 million shares of JPMorgan Chase and completely dumped his entire positions in Family Dollar and Sara Lee. (Source: Why the big players know the stock market bubble is about to burst)
Billionaire George Soros sold more than a million shares of JPMorgan Chase, Goldman Sachs, and Citigroup. George Soros has also increased a huge short position against the S&P 500!
Joseph from the Baron further said this when asked about the significance of Soros’s move:
The last time SPY puts topped the Soros Fund was in the 30th June 2011 filing and we saw the S&P 500 lose 15%+ over the 6-7 weeks following, over July/August (during which time Soros reduced the position substantially). The position in 2011 was less than half the size of the current one which makes me think he might be anticipating a larger decline on this occasion. (Source: Soros’s biggest holding? A bearish call on the S&P 500)
Why are billionaires dumping stocks tied to consumer spending and even shorting the S&P 500? According to the mainstream media, the “Great Rotation” out of bonds and into stocks is only just beginning. The U.S. economy is only now starting to emerge from a 4+ year recession. Obviously these billionaire investors do not follow the herd by investing in what they hear and read from the mainstream financial media.
The answer is so simple that many investors and traders can’t see, or don’t want to see it.
The Federal Reserve printed more money than at any other time in history, and bought bonds, in an attempt to stimulate the economy over the last 4+ years. The Federal Reserve has hinted at tapering and the bond bubble they created is bursting.
The 10-year Treasury Bond has lost about 10% of its value. When the 10-year bond has lost about 50% of its value, interest rates will do a parabolic increase at that point, causing real estate values to collapse once again and the stock market will collapse along with it.
Already we are seeing certain markets collapse from the weight of rising rates like home builder DR Horton.
On CNBC, Harry Dent said the market would crash in the 3rd quarter of 2013 at the beginning of the year. Hard to believe we are already in the 3rd quarter! Check out what Harry Dent has to say and let me know what you think in the comments section below.