Warren Buffett Controls the Stock Universe

Earlier this month, I wrote about how I finally got around to opening my very own OptionsHouse IRA.  What I didn’t tell you was that I took my initial $5,000 and invested it solely in one company.  Bank of America (BOA) was down nearly 40% for the year, more than 60% from it’s 52-week high and every analyst had a “sell” recommendation.  I guess the gambler in me said “buy” because the potential was big, along with the risk.

I haven’t owned the stock but for two weeks and already, there’s been big news story after big news story about BOA.  First, they tanked a bit after others suggested they needed $200 billion in capital, then they rose a bit yesterday after that initial rumor was believed to be inaccurate.  Also yesterday, there was chatter that JP Morgan Chase would absolve BOA with the help of the government but that appears to be inaccurate too.   Wild swings up and down on more than 400,000,000 in traded shares everyday.  This was certainly the stock for me!

But the big news on BOA occurred just a few minutes ago, as Warren Buffett announced he loved Bank of America stock, and decided to invest $5 billion (that must be fun) in preferred shares.  Immediately following this announcement, the stock rose more than 25% and is currently up more than 20% with just a few minutes to go before the market opens.  Apparently, Warren Buffett has the power to increase the price of any stock he chooses, by investing billions. At least initially.

Since I’m new to this game, I’m not sure how long this BOA surge will last, but I can see why day-trading is the most thrilling and dangerous profession there is.  Investing just seems to be a more white collar form of gambling … so I better be careful.  Trade on, America.

Published or Updated: August 25, 2011

Comments

  1. harry says:

    I think BAC price will increase of some days, but not for long. It will decrease then to under $5, maybe lower. At that price will it hit the bottom.

  2. Michael says:

    This is certainly the most volatile stock I’ve seen in the last few years. Certainly has potential … but you could be right. The stock is already receding a bit, down 8% from the day’s high.

  3. Money Beagle says:

    I think Buffet is largely sick of the hedge fund investors moving things around at will. He’s one of the few that can combat high frequency trading and it’s good to see him throw up a middle finger now and then to those who would just willingly send stocks into the tank for no other reason than they can. Good for him!

  4. Hope the BofA trade works out for you. I think it will in the long run, but it could be rough for awhile even with Buffett’s endorsement.

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