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Wall Street Experts Challenge Buffet’s Prediction of a 2016 Stock Market Crash

Posted by Jack Goss  |  November 21,2015  |  16:38 PM
Wall Street Experts Challenge Buffet’s Prediction of a 2016 Stock Market Crash

Wall Street Experts Challenge Buffet’s Prediction of a 2016 Stock Market Crash

Views are mixed on what the US stock market will look like in 2016. Investment gurus like Warren Buffet and John Paulson, have made their positions very clear and their actions back up the belief that the stock market could crash in 2016. On the other hand, Wall Street does not agree with this prediction and take the opposing view.

For several months, Warren Buffet has been dumping shares of some of the companies that he was a major shareholder in such as Johnson and Johnson. The investment guru dropped an astounding 96.8% of its stake in Johnson and Johnson between 2012 and 2014 and has also shed 99.7% holding in Kraft Foods as well as 11.5% of his stake in Procter and Gamble. These are traditional American retailers and Buffet has opted to channel some of his investment funds instead into companies such as Wells Fargo and Company, American Express Company, US Bancorp and the Bank of New York Mellon Corporation. The move appears to be towards the financial sector. But while moving is leaning towards financial organizations, John Paulson is steering clear, having shed a substantial percentage of his holdings in JP Morgan Chase & Company.

At the same time, Wall Street experts believe that increased consumer spending, continued economic growth, and positive stock valuations will bolster the S&P 500 by between 7% and 11%. Their positivity is supported by the fact that the S&P 500 has growth by an all-time high of 200% since March 2009 when it suffered a tremendous hit with the worldwide recession. The prediction is that by the end of 2016, the S&P 500 would have reached a high of 2,275. With all other things remaining equal, Wall Street experts believe that in the absence of any adverse circumstances such as a recession, the US stock market should have a good year during 2016.

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