Why Warren Buffet LOVES The Banks
January 29, 2013 - 1:12pm
Not to beat a dead horse, but this Wells Fargo situation kept lingering in my mind so I thought I'd make this followup post. It is well understood by value investors but since I have a pretty wide readership in terms of stock market experience, I thought I'd post this because there is something to be learned from thinking about WFC, Buffett and how the market works.
- Mr. Market sees a volatile stock. WFC went from $40/share to below $10/share during the crisis; way too volatile. A 75% decline is just unacceptable to own for a conservative portfolio. Of course, Mr. Market is the cause of this volatility. The volatility just illustrates the manic-depressive nature of the stock market.
- Not only is the stock very volatile, but it has gone nowhere for a long time.
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