Warren Buffett Likes Banks?!?

By on August 17, 2007

I’m still scratching my head a little over the fact that Warren Buffett has bought stakes in Bank of America, Wells Fargo and U.S. Bancorp. He must not see the impending train wreck as the train is coming off the tracks.

Granted, Warren Buffett is a very intelligent man. However, he’s not perfect and I think his incredible track record had more to do with luck than a lot of pundits realize. Maybe he’s getting a little senile. I wouldn’t even consider investing new money in financials under the current circumstances given the fact that we haven’t even come near the peak in foreclosures with the way ARMs will be resetting over the next 15 months.

The price of the bank stocks haven’t even come down that much. Bank of America is only down 10% from its 52 week high. I could see it easily falling 30% from the current price of 50. The rest of the group will not be spared as housing continues to deflate. In the not so distant past the financials have had some horrendous episodes which threatened their survival. The coming years will be as challenging as any over the past 30 years and I won’t be buying financial stocks until the survival of one of the major money center banks is in question.

One Comment

  1. Sylvia

    November 10, 2008 at 11:23 am

    Good post.

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