Billionaires Dumping Stocks, Economist Knows Why

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.
Unfortunately  Buffett isn’t alone.

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.

Finally, 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.

So why  are these billionaires dumping their shares of U.S. companies?

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