A client of ours forwarded us an email she received from a financial news organization to which she subscribes. It reads as follows:
A handful of billionaires are quietly dumping their American stocks . . . and fast.
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.
Buffett’s holding company, Berkshire Hathaway, 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 its 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.
She was scared, and who wouldn’t be after reading that? Warren Buffett is a legendary investor, and if he is worried about stocks perhaps you should be too.
The only problem is that Mr. Buffett is not selling Intel or cutting back on Johnson & Johnson now. He already did that—in the summer of 2012. Although the email was dated November 3, 2014, it contained “news” from 2½ years ago.
If you want to know what Mr. Buffett thinks about stocks today, all you have to do is run a quick internet search. During last month’s stock market pullback, he told CNBC he was buying stock in “names you’d recognize.”
Whatever the author’s motivation, the content is misleading. But don’t let it be damaging to your portfolio by blindly following it. Do a bit of research to check out the author’s claims. Or do what our client wisely did: forward it to your investment advisor for his or her opinion before you act on an impulse.