Warren Buffett is a champion of long-term buy-and-hold investing, so is he forsaking those principles by buying shares of ExxonMobil (NYSE:XOM)? In the following video from the The Motley Fool's financials-focused show, Where the Money Is, financial-sector analysts Matt Koppenheffer and David Hanson take a question from their mailbag about ExxonMobil, as well as Wells Fargo (NYSE:WFC) and US Bancorp (NYSE:USB).
The listener's questions was in two parts:
1. The business of oil, which is the lifeblood of ExxonMobil, by most estimates is simply unsustainable. Will we see the end of oil, or extreme scale-back of fossil fuel use, in our lifetime? Who knows, but isn't there enough uncertainty that we can say this is a real long-term risk? Absolutely!
I'm sure I will still be loving ketchup in 50 years (Heinz), but hope by then I will no longer need oil.
2. Also on Buffett -- I know he is one of the great investors of our time (and seemingly a great guy), but what would Buffett's investment record look like without a government bailout -- i.e., if Wells Fargo (and maybe US Bancorp) were wiped out?
Part of the investment thesis is to know and understand risks of what you own. Can we agree that this was a huge Buffett and Berkshire failure leading up to the financial crisis?
One could argue that few people fully understood the risks associated with banks, but for someone referred to as one of the greatest investors that ever lived, it seems inexcusable to give him a pass, because he made the same mistake as the herd.
David Hanson has no position in any stocks mentioned. Matt Koppenheffer owns shares of Bank of America and Citigroup. The Motley Fool recommends Bank of America and Wells Fargo and owns shares of Bank of America, Citigroup, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.