According to an article in MoneyNews.com "a handful of billionaires are quietly dumping their American stocks . . . and fast."
Billionaires don't make that kind of money by making mistakes. So what do they know that most others don't? More importantly what does it mean?
Warren Buffet's "Berkshire Hathaway 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."
"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"
"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 if some of the greatest financial minds of our time are getting out of the stock market, and getting out fast, what does that tell you? Tells me, they understand the future value of the dollar. They understand the difference between tangible assets and paper assets. Tells me the value of Real Estate (ie: tangible asset) will likely stablize and when inflation hits values will rise. It also tells me interest rates will rise, making it harder to qualify for a mortgage, which in turn will make it harder to earn a living in our industry.
February of 2012 Warren Buffet was interviewed on CNBC and stated he would "buy up a couple hundred thousand homes" if it were practical.
These billionaires understand that when inflation hits, the economy will suffer. But more importantly buyers spending habits will change. It will cost more money to purchase the necessities, leaving less dollars available for consumer goods. Things like real estate, food, energy (gas, electricity, heating oil), etc... will be in high demand. I believe this is why you see these billionaires leaving stocks in these types of companies. Why Soros has been buying up as much precious metals as he can get his hands on. Why Buffet purchased the Burlington Northern Santa Fe Railroad. The single railroad company that transports all of the oil out of the Bakken Shale field (one of the countries largest oil fields).
So how do we Realtors, use this to our advantage? First, use your greatest asset... your knowledge. Use it to purchase as much real estate as you can afford. Look for good cash flowing properties. Second, diversify! If the past few years have been difficult financially, be prepared for much worse. Look for additional sources of income, I already mentioned cash flowing real estate, but also look into business opportunities in industries that will continue to be in demand, such as energy. There are numerous opportunities out there right now. Companies like Ambit Energy for example. Not only can you supplement your income but use it to grow your Real Estate business. Lastly, pay down debt, especially credit card debt. As rates rise, so will those minimum payments. So that's what I think the billionaires know and what we can do to take advantage of it. What say you?
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