Subject: BAC
I was fortunate to buy BAC three days before Buffett bought into BAC. He got a better deal with his package of common stock and warrants! I’ve been sitting on that original purchase except for gifting over the years.

Like many of you, I buy, hold and try to be tax efficient. I’ve been steadily building up a wall of worry regarding bank stocks. Private equity and specialty companies like Blue Owl are disrupting large account lending. Basel lll and US regulators have limited banks ability to take risks and, therefore have limited big banks ability to make bigger loan spreads.

At the other end, banks are making more money these days primarily because of slashing expenses in people and buildings. I know from business and personal account experiences (not BAC) just how bad customer service has become. We actually prefer to do everything on line as it is hard to get to a knowledgeable person in a bank (phone, chat or in person)these days. It’s when the on-line interface lets us down our proverbial pot boils over.

Let’s also add how there are many players increasingly growing into banking services.

It is all feeling like a case study in a Clayton Christensen disruption book.

With Buffett now selling some BAC, I bring a question to this esteemed group, but first a story.

We have a staff member who moved backed to her home country with her husband in the 1990s. They were a young couple with young children and temporarily put their savings in a bank in that country. Two months later their savings had lost (as I recall), a huge percentage of its original cash value. The country was Mexico and their savings was roiled by the sudden devaluation of the Mexican peso.

Question: What happens to bank stock valuations when monetary devaluations happen? Anyone have knowledge to share?

Comment and second question : Buffett’s recent actions (estate, raising cash, selling some stocks) have a legacy tone to my eye. Is he de-risking the portfolio to geopolitical, monetary and industry disruption aspects or is he doing this in concert to be ready to pounce on mega-deal coinciding with an economic sea change?

I don’t want to give Buffett credit as an all-knowing seer. I can give him credit for usually having a good feel for long term valuations and market swoons.

Uwharrie