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Warren Buffet’s Latest Investments

With all of the volatility that has been in the market recently I thought I would look at how one of the greatest investors of all time, Warren Buffet of Berkshire Hathaway, has been managing his investments.

In the most recent securities filing it was noted that Berkshire Hathaway has been building its positions in the banking sector. Specifically, Mr. Buffet purchased $4 billion worth of JPMorgan Chase stock. He also established a new position in PNC Financial Services, a Pittsburgh, PA bank. In addition, Berkshire Hathaway already holds large stakes in Bank of America, Wells Fargo, Goldman Sachs, Bank of New York Mellon and US Bancorp as well as shares in the financial services companies of American Express, Mastercard, and Visa.

Historically, when interest rates rise so, too, do the earnings of financial companies. The US Federal Reserve raised rates three times in 2017 and has already raised rates three times in 2018. It is expected that the Fed will raise rates one more time in 2018. As a result of the rate hikes one would expect the earnings and stock prices of financial stocks to rise. Unfortunately, this has not been the case recently. Although interest rates are rising, the price of financial stocks has been flat to down over the past year. Based on history, this situation should reverse, and the price of financial services stocks should begin to outperform the market. It looks like that is what Mr. Buffet is hoping will happen.

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