Warren Buffett’s 3 Top Bank Stock Picks from Bank of America to Citigroup
Warren Buffet, CEO of Berkshire Hathaway Inc., has an estimated real-time net worth of about $133.2 billion as of March 14, 2024, according to Forbes.
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He has been dubbed the “Oracle of Omaha” after his hometown and for good reason. One of Buffett’s key investments? They’re bank stocks. According to Financhill, Buffett has about 53 holdings in his Berkshire Hathaway portfolio. Out of those, five operate in the banking sector.
“If you follow sound banking methods which means not doing some things that other people do, a bank could be a perfectly decent investment,” said Buffet.
Buffett’s Top 3 Bank Stock Picks
Buffett continues to be a big believer in bank stocks. Here are Buffett’s top three bank stock picks, according to InvestorPlace:
Bank of America (BAC)
Currently, Buffett owns more than 1 billion shares of BAC stock, a stake that’s valued at approximately $35 billion. This is Buffett’s largest bank holding and one that he has held on to for a long time despite market swings.American Express (AXP)
Currently, Buffett owns 151 million shares of AXP, a stake that’s valued at approximately $32 billion. Buffett is a long-term believer in America’s 16th largest bank, having first invested in AXP stock back in the 1970s. It’s also worth noting that this is Buffett’s third-largest holding after Apple (AAPL).Citigroup (C)
Currently, Buffett owns 55 million shares of C, a stake that’s valued at approximately $3 billion. Although C is a smaller holding in his stock portfolio, it’s one of the few stocks that Buffett has had a change of heart about and decided to reinvest in.
What To Consider Before Investing In Bank Stocks
Here are a few points to consider before investing your money in bank stocks like Buffett:
Evaluate Your Risk Tolerance: Investing in stocks always comes with risk. While bank stocks tend to be more reliable long-term investments, market conditions can certainly affect your investment’s value. Evaluating your level of risk before entering the stock market is crucial.
Decide How Much Liquid Cash You Should Hold On To: Historically, investing your money in the stock market can lead to significantly more gains in the long term when compared with earning interest in a high-yield savings account. However, you’ll want to be sure to keep at least 3-6 months’ worth of liquid cash (if not more) before allocating additional funds to purchasing stocks.
Decide If You’re Looking For Short-Term Or Long-Term Gains: Investing in stocks and selling them shortly thereafter if the price rises quickly can sometimes yield you large gains. However, this strategy comes with greater risk and typically a greater tax liability. If you’re looking for consistent, long-term gains, then investing in bank stocks is a safer choice.
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Be Sure To Diversify Your Investments: Investing only a portion of your money in bank stocks rather than all of it is a smart way to protect yourself from market fluctuations. Consider building a diversified investment portfolio that consists of higher-risk stocks, lower-risk stocks, and conservative investments such as mutual funds, bonds, and ETFs.
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