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John Paulson: Sell Bonds; Buy Stocks; Double Digit Inflation Coming
Sep. 27 2010 - 4:22 pm | 19,402 views | 2 recommendations | 63 comments
By ROBERT LENZNER
It could be time to sell your low-yielding bonds and replace them with higher-yielding common stocks.

Multibillionaire hedge fund operator John Paulson, the investment genius who made a killing going short subprime mortgages a few years ago, told a standing room only crowd at New York’s University Club that double-digit inflation is about to rear its ugly head by 2012, killing the bond market, and restoring strength to equities and gold.

Paulson’s warning to sell U.S. government bonds is one of the latest signs that the most successful investors of this generation believe the run up in bonds is over. Paulson especially underscored the attraction of equities with earnings yields of 7%-8% compared to the 2.6% pittance available on 10-year Treasuries.

Paulson listed his favorite blue-chip stocks; JNJ (Johnson& Johnson) at a 3.8%…