Another sell signal? "Old Bond King" speaks: Should consider selling on rallies!
"Investors should consider selling on rallies," this is the pessimistic view of Bill Gross, co-founder of Pacific Investment Management Company, on the US stock market. Buffett's conglomerate also net sold $75.5 billion worth of stocks and reduced its stake in Apple Inc. These actions are seen as sell signals, attracting market attention. While some still remain bullish on the US stock market, Gross and Buffett's moves indicate concerns about the stock market
Co-founder of Pacific Investment Management Company, known as the "Bond King," Bill Gross, has a pessimistic view on the US stock market, even the stock god Buffett is not so optimistic.
In a post earlier last Friday, Gross stated, "Investors should stop talking about buying on dips and start considering selling on rallies."
Before Gross made this statement, the US stock market was sold off last Friday due to weak employment data. On Saturday, Berkshire Hathaway's second-quarter financial report revealed that Buffett's conglomerate net sold $75.5 billion worth of stocks and nearly halved its stake in Apple.
It is worth noting that Buffett's trades were made before the recent stock market sell-off, when the S&P 500 index frequently hit new historical highs.
Edward Jones analyst Jim Shanahan said, "You can conclude that this is another sell signal, a selling activity level far above what we expected."
Buffett's selling pressure on stocks was so great that Shanahan did not rule out the possibility of selling the remaining Apple shares held by Berkshire. Shanahan estimated that Berkshire currently holds about 400 million shares of Apple, and he believes it is not impossible for Buffett to completely liquidate Apple now.
Buffett's stock selling spree continued into the third quarter. In the past few weeks, Berkshire has reduced its holdings of nearly $4 billion in Bank of America stocks.
CFRA research analyst Cathy Seifert stated that given Apple has become a significant part of Buffett's holdings, "Berkshire selling Apple shares appears more like responsible portfolio management."
Previously, the company has taken steps to reduce this part of the portfolio. In May this year, Berkshire disclosed the sale of 100 million shares of Apple, accounting for 13% of its holdings at the time.
However, Seifert admitted, "Buffett may be preparing for an economic downturn, 'This is a company preparing for an economic softness.'"
But others on Wall Street remain bullish on the US stock market. Jay Hatfield, CEO of Infrastructure Capital Advisors, stated in a report last Friday that the employment report confirms the US economy is slowing down, but it does not mean the US will enter a recession.
He reiterated a target price of the S&P 500 index rising to 6000 points, a 12% increase from the last closing price. Hatfield also predicted that the year-end elections will bring a clearer rebound, and the economy will continue to show slow growth