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Billionaires are dumping stocks

As the article popped onto my computer screen, a picture of a worried-looking elderly man appeared with the Newsmax article titled "Billionaires Are Dumping Stocks, Economist Knows Why."

The article insinuates that Warren Buffett is madly liquidating his stocks because of ensuing calamity that was conveniently predicted by the authors of the book "Aftershock."

The first time a client forwarded the email, I didn't think too much about it. The second time it began to get my attention. After receiving the same email link from a third client, I decided to do some further digging to at least attempt to verify the claim.

Our firm follows Buffett's investments pretty closely. As such, when the article led with the theme of impending doom predicated upon Buffett selling out - we knew the author was stretching the truth.

Large money managers in the U.S. must file their holdings with the Securities and Exchange Commission. Knowing this, we downloaded all of Buffett's trades to help our clients get a better picture of this claim.

Although Buffett had, in fact, liquidated certain stocks, his firm was buying others at the same time. There was zero indication of a complete liquidation going on. Additionally, we pointed out that people read too much into trades that are filed under Buffett's name. Buffett has other investment managers who work for Berkshire Hathaway. As such, when it was reported that Buffett had bought and sold Intel, it turned out to be one of his employees and not Buffett himself.

If we are able to figure this out with about five minutes of work, why would Newsmax run this article?

The answer, like so many others, is money.

The cleverly written article is designed to create fear and concern. It then leads you to an interview with the authors of "Aftershock" with a limited time offer for a free copy of the book.

However, if you delve into the details and disclosures, you can uncover some interesting information about the authors and Newsmax.

First, the book is not "free." Furthermore, although Newsmax has many legitimate authors who write for it, it also has a publications operation. These publications are not charities offering up "free" information. Rather it is a for-profit venture.

According to disclosures on its website about the free book: "The offer may require payment to cover shipping and handling or a subscription to one of our paid newsletters."

Additionally, "The authors and Newsmax have not independently verified or otherwise investigated all such sources of information."

Finally, "Christopher Ruddy, Newsmax and other persons or affiliates associated with the service may at any time withdraw any or all funds they have invested in the service."

After considering these items, it is pretty obvious that the "news article" in question is actually a blurb designed to look like a normal news article - but the real purpose is to generate sales for the book "Aftershock."

Given this, remember that virtually nothing in this world is free. Without profitability, it is pretty hard to pay the bills. As such, we have no problem with anyone legitimately earning a living. However, whenever you are told that something is free - be sure to take it with a hint of skepticism and look for warning signs.

One thing that should be apparent: Consumers need to ask more questions.

Dave Sather is a Victoria certified financial planner and owner of Sather Financial Group. His column, Money Matters, publishes every other Wednesday.

By Dave Sather, Originally published Tuesday April 2, 2013 Victoria Advocate