Stock Market Under Fire as Key Investors Turn Bearish
A growing chorus of scepticism about the stock market is emerging from two of the most influential investors of all time. Bill Gross, the “Bond King,” and Warren Buffett, the “Oracle of Omaha,” have both expressed bearish sentiments, sending shockwaves through the financial world.
Gross, known for his astute bond market predictions, took to X on Friday to warn investors of a potential market downturn. He characterised the current landscape as one with few “bull stocks” and highlighted pipeline master limited partnerships, banks, and financials as potential safe havens. His stark advice: “Investors should stop talking about buying the dip and start asking about selling recoveries.”
Stock Market Turbulence
Gross’s comments came on the heels of a tumultuous week for the stock market. A weak payroll report on Friday exacerbated losses following a steep decline on Thursday triggered by a disappointing manufacturing index reading.
Adding fuel to the fire, Berkshire Hathaway’s second-quarter earnings report revealed a massive $75.5 billion stock sell-off, including a nearly 50% reduction in its Apple stake. The move, executed before the recent market turmoil, has raised eyebrows among investors and analysts alike.
Analyst Reactions
Jim Shanahan, an analyst at Edward Jones, described the selling activity as “far higher than we were expecting.” Buffett himself didn’t rule out completely exiting Berkshire’s Apple position, currently estimated at around 400 million shares. Moreover, the conglomerate has continued its selling spree into the third quarter, unloading nearly $4 billion in Bank of America shares.
While some analysts, like Cathy Seifert of CFRA Research, view Berkshire’s Apple stock sale as prudent portfolio management given the company’s massive exposure, others believe it signals a more cautious stance towards the overall market. Seifert suggested that Berkshire is “girding itself for a weaker economic climate.”
Contrasting Opinions
However, not everyone is convinced of an impending downturn. Jay Hatfield, CEO of Infrastructure Capital Advisors, maintains a bullish outlook, arguing that the recent economic data indicates a slowdown rather than a recession. He reiterated a price target of 6,000 for the S&P 500, implying a 12% upside from the last close. Hatfield predicts a market rally towards the end of the year as the election brings clarity and the economy continues to show modest growth.
