A civilization reaches its highest developmental apex with a mature banking industry. Billionaire George Soros has discussed the change in fortunes of the banking sector from 2008 to 2016. Could economic problems in 2016 lead to Credit Crunch II?
“Duct Tape on Banking Sector in 2008″
Duct tape is a great way to fix a problem temporarily, but it is not a permanent solution. In 2008, the sub-prime mortgage crisis caused the world to worry about the solvency of the entire global banking system. George Soros talked about this in his 2008 book subtitled, The Credit Crisis of 2008 and What It Means.
In January, Billionaire George Soros compared the beginning of the year 2016 to the Credit Crunch of 2008 at Davos. Small-time investors should look at how George Soros has treated banking stocks to gauge his feelings on the sector. Did George Soros sell banking stocks in 2015?
“George Soros’ Banking Stock Investment Strategy”
In 2008, the banking sector was in danger of collapse and stocks were very low. Wise investors, like Soros, can profit by buying good stocks at their lows. When the Federal Reserve guaranteed banking debt, it was a risk management dream come true. George Soros, Warren Buffet & other powerful billionaires purchased low banking stocks in 2008.
Not only were banking loans back-stopped by the Federal Reserve, but banks were also given very cheap loans. Goldman Sachs, JP Morgan and Citigroup could make large purchases of valuable assets. If some of the assets proved to be bad, the government would purchase them from the banks.
“Soros Sold Bank Stocks in 2014″
Then in 2014, according to Marketwatch, George Soros sold his bank stocks and purchased gold miner stocks. In 2015, Bank of America, Citigroup and JP Morgan Chase eliminated more than 26,000 positions. Thus, Soros’ timing was impeccable – banking stocks had been popular from 2008 to 2014, but something changed and banks were vulnerable in 2015.
Wise investors change with the times as suggested in the US Money Reserve Podcast of US Money Reserve President Philip Diehl. He admitted that the US Dollar was strong, but would eventual weaken. Just like Soros, you can adjust your portfolio by investing in gold products, like government-issued coins. If you pay attention to George Soros’ words and actions, Credit Crunch II might be just around the corner.