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.
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?
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]
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