The Strategist

Buffett lost 1.4 billion during fall of Wells Fargo

09/14/2016 - 13:22

Wealth of American billionaire Warren Buffett decreased by $ 1.4 billion since Wells Fargo & Co’s share price dropped by 3.3%. The fall occurred amid a scandal around the bank's employees, who opened more than 2 million accounts without consent of customers, reports Bloomberg.

Stuart Isett/Fortune
Stuart Isett/Fortune
At the close of trading, shares of Wells Fargo were traded at $ 46.96 per share. This reduced market cap of the bank down to $ 236.9 billion.

Holding company Berkshire Hathaway Inc., the largest shareholder of Wells Fargo, lost 2% of its value. This, in turn, had a serious impact on capital of 86-year-old Buffett. Wealth of Buffett - the fourth richest man in the world – is currently estimated at $ 65.8 billion.

The decline took place against the backdrop of the largest sales of assets, which is why the 400 largest capitals have lost $ 93 billion since 9 September. The billionaires waved goodbye to $ 37.3 billion after a fall in value of stocks and bonds. Besides, there was a decline in oil prices after the International Energy Agency (IEA) announced that the glut on the hydrocarbon market will last until the second half of 2017.

The second richest man in the world, founder of Inditex SA Amancio Ortega has lost $ 3.3 billion since the sale of shares began. Microsoft co-founder Bill Gates, who is considered the richest man in the world with a fortune of $ 87.3 billion, lost $ 2.4 billion. Wealth of Amazon founder Jeff Bezos declined by $ 1.9 billion, while Buffett lost $ 1.6 billion on the sale.

Majority of people strongly believe that Warren Buffett is the luckiest investor, who made his capital by investing in stocks. However, the word "luck" is probably not the most relevant here. Buffett sticks to exceptionally fundamental analysis when choosing grounds for investment. He selects stocks exclusively by financial and operational performance of the issuing companies. He buys not just shares, but successful business that is behind these securities. At the same time, Buffett prefers those assets, which, in his opinion, are undervalued at the time of purchase.

Buffett is a long-term investor - on average, he holds shares of each company for 10 years. And he says he does not care what happens on the stock exchange after he bought them. By his own admission, he holds good stocks as long as they can make a profit. He will not sell them ahead of time, which has a slight impact on number of financial indicators of Berkshire Hathaway (BRKA), according to Buffett himself.

Buffett was even nicknamed the "Oracle of Omaha" for his investment flair. "The main secret of a successful investment is to choose good stocks at the right time, and keep them as long as they remain good." The best known and most often quoted example of Buffett's strategy is the fact that $ 10,000, invested in his company in 1965, would bring about $ 30 million nowadays. The same $ 10 thousand, Invested in the S&P 500 index, would now be worth only $ 500 thousand. Buffett himself is consistently featured in Forbes’ top four of world's richest people.