Some of the world’s smartest investors are cutting back on U.S. stocks…On Monday, Bloomberg Business reported that hedge fund managers cut their holdings in U.S. stocks by $200 billion last quarter. These funds now hold $1.5 trillion in U.S. stocks, down from $1.7 trillion at the end of June.The list of fund managers who trimmed their U.S. stock holdings reads like a “who’s who” of the investing world. It includes David Einhorn, John Burbank, David Tepper, and Stan Druckenmiller.Druckenmiller is one of the world’s most successful hedge fund managers. He generated an incredible 30% average annual return from 1986 to 2010. Today, he runs Duquesne Capital.At a conference earlier this month, Druckenmiller said he’s investing with caution right now.I’m working under the assumption that we may have started a primary bear market in July…I can see myself getting really bearish. I can’t see myself getting really bullish.Duquesne Capital cut its holdings of U.S. stocks by 41% last quarter, according to recent company filings.• David Tepper cut his fund’s position in U.S. stocks by 30% last quarter…Tepper is the founder of Appaloosa Management, a $24 billion hedge fund that’s averaged 30% annual returns since 1993. That’s almost triple the S&P 500’s 11% return over the same period. Tepper has outperformed the market by nailing several “big picture” calls over his career.Tepper had been bullish on U.S. stocks since the global financial crisis. But he recently changed his stance. In September, Tepper told CNBC, “I can’t really call myself a bull.”According to Bloomberg, Appaloosa trimmed its holdings in U.S. stocks by 30% last quarter. The fund now holds $2.86 billion in U.S. stocks, its smallest stake since 2011…when the fund was 25% smaller.• Tepper sees “all kinds of problems” in the market…Like us, Tepper believes U.S. stocks are too expensive. According to the popular CAPE valuation ratio, U.S. stocks are now 58% more expensive than their historic average.Tepper is also concerned about weak earnings growth. Earnings growth for companies in the S&P 500 has slowed six quarters in a row…As of last Friday, 90% of the companies in the S&P 500 had reported third-quarter results. Based on that data, research firm FactSet reports that S&P 500 companies’ earnings are set to drop 1.8% from last year.The S&P 500 is headed for its second straight quarter of falling earnings…which hasn’t happened since 2009. It means the U.S. stock market is on the verge of an “earnings recession.”Meanwhile, quarterly sales for S&P 500 companies are on track to fall for the third straight quarter. FactSet reports that third-quarter sales for companies in the S&P 500 have fallen 4% from last year. Recommended Links Can you legally remove yourself from U.S. tax code?70-year-old multimillionaire says “YES!” Click here to learn how to get the full story. – The Best Place to Hide Your MoneyIt’s tax-free. Pays up to 37 times more than bank accounts. And you DON’T NEED TO REPORT IT TO THE IRS. No wonder government doesn’t want you to know about this secret account. Click here to discover more… — • The U.S. stock market is long overdue for a major pullback…The current bull market in U.S. stocks started in March 2009. It’s run for 80 months and counting. That’s 30 months longer than the average bull market since World War II.Bull markets don’t die of old age, but they all die eventually…The rally in U.S. stocks has already lost most of its momentum this year. The S&P climbed 204% from March 2009 through December 2014. But U.S. stocks have gone nowhere since. The S&P 500 is flat on the year.It takes a 20% decline to officially end a bull market. By that definition, this one isn’t technically over yet…though it took a big hit when the S&P 500 fell 11% in just six days in late August. Since then, U.S. stocks have recovered most of their losses, but have not made new highs.E.B. Tucker, editor of The Casey Report, thinks the bull market died during the mini-crash in August. E.B. shared that bold call with his readers in September.Last month’s major stock market decline is the start of a very tough time for stocks and the economy…The market has recovered in the past two weeks. But we think it’s only temporary. In other words, we’re in the middle of a “dead cat bounce.” It’s looking a lot like 2007.• Meanwhile, demand for gold coins is skyrocketing…Sales of U.S. American Eagle gold coins hit a five-year high last quarter.The U.S. Mint produces various sizes of American Eagle coins. They’re the most popular gold coin in the United States.The chart below shows quarterly sales of American Eagles since 2009. The U.S. Mint sold over 12 tons of American Eagles last quarter. That’s the most it’s sold since the second quarter of 2010. It’s also 251% more than the U.S. Mint sold during the same quarter last year.The price of gold has declined 10% this year. The huge spike in American Eagle sales last quarter suggests investors are taking advantage of low prices to load up on physical gold.Casey readers know we think this is a smart approach. Gold is the ultimate form of financial wealth insurance. It’s preserved wealth through every kind of financial catastrophe imaginable. It will do the same thing when the next catastrophe hits…The U.S. stock market looks ripe for a major downturn. Valuations are stretched. Earnings and sales are dropping. And some of the smartest investors on the planet are scaling out of U.S. stocks.A stock market collapse in the coming months is a real possibility. If you don’t already hold a significant amount of gold, consider buying physical gold while it’s still cheap.Chart of the DayHere’s another reason to carefully assess your stock holdings…Today’s chart shows the level of margin debt for the New York Stock Exchange (NYSE). Margin debt is the value of stocks bought with borrowed money.As you can see, margin debt growth accelerated and peaked right before the last two major stock market crashes…Margin debt growth accelerated in the late 1990s. It peaked in March 2000, the same month the S&P 500 topped out. U.S. stocks went on to lose 37% during the dot-com bubble burst.Margin debt growth accelerated again in the mid-2000s. It peaked in July 2007, just three months before the S&P 500 topped out before the global financial crisis. Stocks went on to decline 57%.Margin debt also had a small run-up in 2011 before turning over that May. The S&P 500 peaked right around the same time. Then it declined 19.4%…stopping just short of the 20% threshold necessary to qualify as a bear market.In April, the level of margin debt for the NYSE hit an all-time high of $507 billion. In September, it fell for the third month in a row. The level of margin debt is now 11% below its April record high.At this point, it’s impossible to know for sure if the decline in margin debt is signaling an imminent downturn in stocks. However, we can tell you that the U.S. and global financial markets are far more fragile today than they were in 2011.Regards,Justin SpittlerDelray Beach, FloridaNovember 19, 2015We want to hear from you.If you have a question or comment, please send it to [email protected] We read every email that comes in, and we’ll publish comments, questions, and answers that we think other readers will find useful.