Why is Warren Buffett Selling Bank of America Stock (BAC)

Hey everyone, Dylan Jovine here with Behind the Markets. Happy Wednesday! Today, I want to address a question many of you have asked over Labor Day weekend-why is Warren Buffett selling Bank of America, and should you be concerned? Is Bank of America in trouble, or is there a bigger reason behind this move?
The simple answer lies in how banks make money. When the Federal Reserve starts lowering interest rates, bank profits typically shrink because the margin between what they borrow at and what they lend at decreases. This is likely why Buffett is selling-he sees the short-term trade on bank stocks as being over. This is why we haven’t recommended any bank stocks recently, with one special exception in Breakthrough Wealth.
If you’ve held bank stocks for the long term, this isn’t a cause for concern. But if you bought them in the last couple of years to ride the interest rate wave, now might be the time to sell. With potential changes in the tax regime coming up and the ongoing economic challenges, it’s a good time to evaluate your position. Thanks for tuning in, and have a great day!
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