Wednesday, September 14, 2016

Second Opinion from the Billionaire Club

Blogs are interesting in the aspect that they offer a different viewpoint. However, there is always some doubt concerning the who, who is behind the digital print and their creditability. As a blogger, I would hope that after you have read enough articles by a certain blogger, say myself, that the dots connect to reveal that the writer is providing factual information along with the opinions of that writer.
With that said, this piece will be different. The views belong to a select club I call "Billionaire Bears." It is like getting a second opinion from another doctor as to a prognosis. In this case, the stock market and our economy.
Bear Club
This unique perspective is not from your basic millionaire as I am still waiting for Michael Anthony to knock on my door, but the views from the one percenters themselves. They are all billionaires.
In a way it is nice to know that my viewpoint is connected to the connected. Maybe we don't check off exactly the same list of reasons or solutions, but we agree on many of the fine points for our distress about our economy.
George Soros
He recently sold his large position in Barrick Gold. Gold bugs, don't fret. It is not that Soros no longer believes in the gold bull, but that he sees a correction after the huge run up in prices. He will double down on gold, but at a cheaper price. What he did with those gold profits is the point of consideration. He bought 1.9 million "puts" of the SPY - ETF. He sees the market climbing on low interest rates and air. He sees another financial crisis like in 2008. He now controls 4 million puts on the SPY.
Paul Tudor Jones
Ever hear of him? This one percenter called the market crash on "Black Monday" in October 1987 when the market fell over 22% in one day. His fund owns almost eight and a half million puts on the SPY. One reason is that he cites the price of the market. Using CAPE, he says, "The market is 62% over historic average."
In addition to this respected group of traders is the companies themselves. Share buybacks are beginning to lag due to corporate debt. Low interest rates sparked the idea to raise the stock price by buying back company shares. CEOs also used low rates to finance dividends. You could create value on the cheap. Now, that technique is having consequences. Corporate debt has ballooned to over $51 trillion and rising. Companies have put themselves in a tough position because revenues cannot meet expenses. A CNBC report shows that corporate insiders are selling their company stock in record numbers, while at the same time, they are offering an optimistic analysts of their company before the media. The stock market is losing one of its biggest buyers and this is reflected in the low volumes. These behind the scenes sales do not escape some other members of the "Bear Club."
Stan Druckenmiller
He just screams, "Get out of the market!"
Carl Icahn
The "old" corporate raider, not to be confused with the "just win, baby" of Al Davis who owned the "old" Oakland Raiders. Anyway, Carl says, "I don't think you can have (near) zero interest rates for much longer without having these bubbles explode on you."
Jeff Gundlack
in an interview with Reuters said, "Sell everything. Nothing looks good."
Finally, Bill Gross, the old bond king in his monthly investment letter said, "I don't like bonds. I don't like stocks. I don't like private equity."
Bottom line: The decision is yours, but if you decide to remain invested, you are basically arguing with richer more successful people. Caveat emptor - Buyer beware!