When The Billionaires Are Dumping American Stocks, What Could That Mean For The Stock Market?
In recent weeks Warren Buffet, George Soros and John Paulsen, all billionaires with a track record of accurately playing the market, have started dumping their American stocks. Buffet who had previously been the cheerleader for American stocks has been complaining of a “disappointing performance” and started dropping shares from Procter & Gamble, Kraft Foods, and Johnson & Johnson. Likewise, John Paulsen who made his billions off the mortgage meltdown dumped 14 million shares of JP Morgan Chase, as well as shares from Family Dollar and Sara Lee. Lastly, George Soros, sold over a million shares of bank stocks including JP Morgan Chase, Citi group and Goldman Sachs. With their billions attesting to their success in predicting the market, it can be a little disconcerting to consider why they may be getting out of a large portion of their US holdings?
Could The Billionaires Be Predicting A Downturn In The US Markets?
The biggest question to be answered, is why the above mentioned billionaires would be opting out of these stocks? Many economists feel that it could be largely associated with the effects of Quantitative Easing, and the long-term negative impact that will have on the US money supply. Robert Wiedemer, renown economist who accurately predicted the collapse of the US Housing market, equity markets and consumer spending back in 2006, has been saying for months now that he anticipates as much as a 90% correction in the stock market when inflation takes off. Now 90% may seem a bit extreme, but that is worse case scenario. Let’s just imagine that inflation hits the 10% mark. In that event, US treasuries would lose half of their value. If inflation hits 20% they will be basically void of value, which would lead to the collapse of real estate and the stock markets. Quantitative Easing acts like the build-up of pressure on a damn. The damn can contain the rising flood waters of money into the market for a time, but eventually the integrity of the damn suffers and a flood pushes through the damn, wiping out everything in its path. If QE causes a flood of money to wipe out the monetary system and the value of the US dollar, it’s only a matter of time before we see major corrections in the stock market and major problems over all.
How To Protect Yourself Given Worse Case Scenario?
Even if the situation isn’t as dire as Wiedemer predicts, the impact of QE on inflation, and even a minor correction in the stock market could either mean, you lose a substantial amount of your hard earned assets, or it could mean you were properly positioned and you used an economic downturn as potential for growth. In the face of inflation, gold and silver are the only investments expected to retain their value and perform. If you haven’t yet positioned at least a percentage of your assets into metals now is the time to do so. For more information visit redhawkgoldandsilver.com