Billionaire's Dump Stock... What Should You Do?

The stock market has been on a tear since 2009 and currently displays a 6.5% stock market rally over the last three months, so why are billionaires quietly dumping their American stocks fast?  I have been predicting a drop in the market of 30-50% but you can’t lead a horse to water and make him drink.  How does a predicted 90% drop in the market make you feel?  Uneasy I suspect, but it is all just a matter of time as 90% of Americans bask in the glow of a raging 14,000 market.  It is but a mere house of cards, reported daily as truth by the bought media in our abnormal world today.   Haven’t you yourself seen the dramatic number of mall closures, street front stores empty and vacant office space is everywhere you turn?

Did you know that Warren Buffett recently complained of the disappointing performance of American companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods?  Buffett’s holding company Berkshire-Hathaway, has drastically reduced their 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 it’s his entire stake in California-based computer parts supplier Intel and Buffett isn’t alone.  With 70% of the U.S. economy dependent on consumer spending, Buffett’s lack of faith in these companies’ future prospects is worrisome.

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 dumped 14 million shares of JPMorgan Chase and their entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.

Then there is the Wizard of Oz, billionaire George Soros who reportedly 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 just reached again its record high from 2007 and is the midst of a historic rally. Real estate prices have finally leveled off and for the first time in five years they tell us housing values are rising and that the unemployment rate has stabilized.  It’s likely that these professional investors know something that the average investor doesn’t know or do they control the media’s reporting that keeps the average investor fed the garbage of the day.  I believe that their own research points toward a massive market correction of 90% and they aren’t sharing that information so they can keep the spoils for themselves.  Remember the key to keeping your money is to do exactly what the masses aren’t doing.

Robert Wiedemer ‘s new book  “Aftershock” predicted the collapse of the U.S. housing market, equity markets and consumer spending that almost sank the United States. Wiedemer says the 90% drop in the stock market is “a worst-case scenario,”

The Wiedemer’s published their famous research book in 2006 entitled “America’s Bubble Economy.”  In that book they predicted what many thought would never happen.  The real estate bubble imploded in 2008 and 2009.  Next the stock market bubble that crashed and then the discretionary spending bubble.  While many believe the worst is over, since the stock market and housing market is reported up as well, it is merely the calm before the storm and the evidence suggests that the excessive money printing has only accomplished a wobbly and feeble attempt to re-inflate the economy.  As anyone knows you can’t re-inflate a burst balloon, it only requires more and more air until the whole is so large it will no longer hold any air.  The aftershock will ultimately bring down all six bubbles in the next two to four years.   All the evidence is plain as day except for those with the brain of a peony that the last remaining bubbles, the dollar bubble and the government debt bubble will soon implode.  Mr. Wiedemer suggests two simple rules, stay away from stocks and real estate until after the dollar bubble pops and stay away from long-term bonds and all fixed-rate investments including whole life insurance. I strongly suggest you get your dollar into a vehicle that retains its value like precious metals do until the smoke clears.

Wiedemer says the 90% drop in the stock market is “a worst-case scenario.” Wiedemer explains that “It starts with the reckless strategy of the Federal Reserve printing money out of thin air in an attempt to stimulate the economy and these funds haven’t even entered the market or economy yet.  It is a certainty that once the dam breaks, and this money passes through the reserves and hits the markets, inflation will surge.”  “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. Then the stock market will collapse as a consequence of these other problems.”

Wiedemer predicts that companies will be spending more money on interest than business expansion costs. That means lower profit margins, lower dividends, less hiring and more layoffs.  No investor will want to own stocks with falling profit margins and shrinking dividends.  That is why Buffett, Paulson, and Soros are dumping stocks, they have decided to cash out early and leave Main Street investors holding the bag.  Main Street investors will see their investment and retirement accounts decimated for the second time in five years.

Did you know that it is estimated that less than 1% of the population owns precious metals as a safe house for their savings?  Don’t follow the crowd off the financial cliff protect your family and your life’s savings by purchasing precious metals before it’s too late!

Roxanne Lewis is a precious metals broker and business woman in western Colorado dedicated to educating others to protect themselves and their family’s assets.  She writes weekly articles on her precious metals website www.whynotgold.com  and encourages you to visit her website featuring prices from the COMEX at just 1.25% and less.  No fee for buy backs. She may be reached @ [email protected]