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Buffett Is About To Lose A Boat Load Of Money

Warren Buffett got into the investment at the age of 11 when a paper route allowed him to save enough money to buy some farmland.  By the time Buffett was 15, he had net worth of about $6,000.  By the time he was 30 his net worth was $1MM and by the time he was 56 his net worth was $1 billion.  And well, you know how the rest of the story goes.

Under CEO Warren Buffett, Berkshire Hathaway Inc. (BRK.A) has been betting heavily on financial stocks, which now represent about 20% of its roughly $481 billion market capitalization as of Aug. 14, 2019, up from about 12% at the end of 2010, The Wall Street Journal reports. Given that banks are widely viewed as a proxy for the U.S. economy as a whole, this indicates to some observers that Buffett is rather more optimistic about growth potential in the U.S. than other analysts who anticipate either a slowdown or a recessionary contraction.

The market values of Berkshire's 8 biggest positions in financial stocks as of the close on Aug. 14 were, per calculations by CNBC: Bank of America Corp. (BAC), $25 billion, American Express Co. (AXP), $19 billon, Wells Fargo & Co. (WFC), $18 billion, U.S. Bancorp (USB), $6.7 billion, JPMorgan Chase & Co. (JPM), $6.2 billion, Goldman Sachs Group Inc. (GS), $3.6 billion, Bank of New York Mellon Corp. (BK), $3.4 billion, and credit rating agency Moody’s Corp. (MCO), $5.1 billion. According to the latest Forbes count, the so-called Oracle of Omaha is currently tipping the wealth scales at $73.1 billion. That’s good enough to put Buffett, who turns 87 this summer, at No. 3 on the U.S. rich list, behind Microsoft’s

Source

Flattening or an inverted yield curve hurts the banks’ profitability profits because as short-term rates raise and long-term rates decline, it causes a bank’s net interest margin figure and eat into bank profits. To put this another way, banks make money by borrowing cash at short-term rates and then lending them out at long-term rates, but a flattening or inverted yield curve forces banks to spend more money funding the loans, resulting in less money being made.

The Financial Select Sector SPDR® Fund seeks to provide investment results that represents the financial sector of the S&P 500 Index by seeing exposure to companies in the  diversified financial services; insurance; banks; capital markets; mortgage real estate investment trusts ("REITs"); consumer finance; and thrifts and mortgage finance industries.

Buffett is one of the greatest investors in the history of Wall Street, so who I’m I to question his investment decision.  However, I think he is about to lose a boat load of money in the next couple of years.

Ever since XLF it the monthly supply at $30.50 back in January 2018, price has lost its mojo. Not only that, but price formed a multi-year, more like a decade double top, one serious reversal pattern. Thus, the chart suggests price is heading to the monthly demand at $19.50. And if Buffett doesn't adjust his portfolio, well that $73 billion net worth might tickle down to about $63 billion.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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