February 2, 2018

There was nothing boring about Friday’s markets.

The S&P 500 tumbled 2.1% and Toronto was down 1.6%.

Despite the scary headlines of the DOW being down 666 points or 2.5%, this drop is not large in the context of the way the U.S. market roared ahead in recent weeks.

Almost all the stocks on our list were down. Some of the more notable declines included:

Canadian Western Bank, down 3.0%

Boston Pizza Royalties Income Fund, down 4.0%.

AutoCanada down 5.0%.

Experiencing declines is inevitable when invested in equities. I did not find today’s declines to be bothersome. Rather, they could represent buying opportunities. But I would not be in a rush to redeploy cash. My strategy has been to lean against the market on the way up by building cash and then slowly redeploying cash if and when the market or particular stocks that I like decline.

Meanwhile the seemingly unstoppable Amazon rose 2.9% after reporting strong gains in Q4. Amazon always looks way over-valued to me but then continues to rise. I will puzzle over its numbers again soon. It does not bother me that I “missed out” on Amazon since it simply does not pass the criteria that I use and which has been quite successful for me. I am more regretful about Apple because it would have passed my criterion if I had gone through its numbers but I never did so. Partly (or largely) that was likely because of an unconscious mental block against it since looking at the numbers might have reinforced regret at not buying it many years ago. I have never claimed to be immune to such illogical biases. Actually running the numbers tends to overcome the bias in a lot of cases.

Wells Fargo got slapped hard after the close by the FED and was down 6.2% in after-hours trading. I sold it too early back in late 2016 because of uncertainty over regulatory penalties and no longer follow it closely. The FED has ordered four people off the Board and indicating it will not allow Wells Fargo to increase its assets. The bank could reduce its assets by not issuing new loans as fast.

I rather suspect Warren Buffett might have liked to sell some Wells Fargo. The problem is when you are Berkshire and you own 10% of something, any indication you would sell would tank the price.

I certainly would not be surprised to see Wells Fargo tumble quite a bit more on this news.