A lot of financial industry and stock market observers raised their eyebrows when the revelation came that a lot of the big time billionaire investors are withdrawing their money from the stock market. Names like Warren Buffet and George Soros are pulling money out of the stock market.
You don’t have to be a super genius in the stock market game to know what this means. If the best and brightest minds in stock investing are pulling out, it is a very bad indication. What makes this all interesting is that they are pulling out when the market keeps hitting new record highs. In 2013, the market closed at a record high and the market is white hot right now. It is so lucrative that even dubious companies (in terms of current profit capability) like Twitter are getting sky-high valuations. You almost feel the tension in the air. You almost feel that the other show is going to drop sometime soon and we may soon see a repeat of the dot com crash of 2001. While nobody should hope for this scenario, the numbers do indicate a massive correction. Just like in the physical world, what goes up must come down. And given the very soft state of the US economy, as well as, the rapid increase in stock values, it doesn’t take a genius to conclude that the stock prices are not justified by the real world values of the businesses of the companies behind this red hot stock shares. Which brings us to why billionaire investors are bailing out. You have to remember, these investors like Warren Buffet and George Soros did not make their money building companies. They made their money, for the most part, in investing. So they know a thing or two about intrinsic and real value. The fact that they are voting with their feet shows that something is very wrong with the stock market. If the stock market crashes in 2014, this is could be very very bad news. Why? Not only is it bad news for people living in the United States because of the massive unemployment that it may cost but also because of the impact it will have on stock markets in developing markets in Asia and other countries. This could become a global economic recession if not depression.
Be that as it may, there are many text stocks that are post for IPO in 2014. If I were their adviser, I would try to push them going public as soon as possible before the market crashes. Keep it mind that this push to go public doesn’t mean that you’re trying to sell an empty bag to investors. You’re trying to sell money for these companies that would, otherwise, have a very good potential of continuing to be profitable. I am of course talking about solid companies like Box, the business Cloud storage provider and Dropbox which is one of the most popular data storage synching providers in the market. The list of potential IPO’s are quite long.
Be that as it may, if there is a market crash, it’s going to be 2001 all over again. It’s going to be all about a flight to quality. In other words, companies that are actually making money or actually based on solid gold ideas will flourish while companies based on height and connections will go by the waste side.