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Buffett could possibly be the biggest hypocrite of them all

6 Comments

The problem with Warren Buffett is that unlike many great investors, he decides to talk more to CNBC and other news agency.

And recent interviews have shown his support for investing in US and US equities.

Yet what he says and what he silently does are different things.

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.

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. Berkshire sold 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.

In his defense, much of the investments recently are actually carried out by the 2 managers that he brought in. We should not always equate all Berkshire’s actions with what Buffett believes in.

Yet I can’t help but feel he doesn’t have any say in all this.

And he doesn’t seem to be alone in this.

John Paulson

Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the 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.

Surprisingly, they have been dumping consumer stocks, which usually do better during recession times. Could things change so drastically bad to warrant some thing like this?

George Soros

Billionaire George Soros 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.

Soros holdings can be rather short term, so we shouldn’t read so much in this.

[Money News | Billionaires Dumping Stocks, Economist Knows Why | Read More]

Kyith
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Sridhar

Saturday 8th of June 2013

Hi Drizzt, The actions of Buffett may not always match with his philosophies. This is true for any investor, who may change his/her views based on the situation at hand. Hypocrisy is quite common among the gurus as well....lets not believe them 100%. I would appreciate gurus and learn from them but still need to use my own common sense.

These large investors can afford to sell consumer stocks, but if common people do that they lose their steady dividends, price appreciation and the opportunity for long-term wealth. Gurus have several other alternatives to invest - say like real estate - commercial or residential, private equity/venture capital, buying unlisted companies, preference stock, convertibles, international ETF, option writing, etc. The list of options can go on and on....but for a small investor there are not many options available - hence for normal investors its best to stick to their own strategies while taking some learning out of the gurus. Take gurus with a pinch of salt (remember the recent acquisition of Heinz by BH.....and you will understand that they are not the sacrosanct value guys as being projected in the media)

Kyith

Saturday 8th of June 2013

Hi Sridhar,

Thank you so much. You are the few that understood the message.

Justin

Monday 24th of December 2012

Your comments are worrying, especially the part on buffett. Half-truths and a lot of assumptions leading to an unfair judgement/conclusion. Was it done on intent in order to attract attention? Else I would advice you to do proper homework before posting so as not to make a clown out of yourself.

Drizzt

Monday 24th of December 2012

hi Justin, the title can be over the top, but my views are not. you would have question his comments published recently about the state of things and what Berkshire Hathaway do. Sometimes the truth is a bit hard to swallow.

C.S.

Sunday 23rd of December 2012

Hi Drizzt, wow! This is scary and worrying. Thanks for sharing. The US great recession seems to be happening in a couple of years according to the interview given by Wiedemer, and that is not a very long time from now. Should this recession happen, what do you think will be the impact to this part of the world, including Singapore? And what do you think is the best ways of protecting our wealth before it is eroded by the high inflation? If the billionairs are selling stocks, then should we do the same? What else can we invest in? Gold? Short-term bonds? Commodity? Regards, C.S.

Drizzt

Monday 24th of December 2012

hi C.S, the billionaires have sold stocks in the past and bought big, but its not always that they are correct. What was not published is their rational of doing so.

Paulson since his big bet to short the housing have not been making a lot of right plays. And that tells you a lot.

If you want a low volatility solution, consider looking at Ray Dalio's all weather portfolio.

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