Don't Buy a Bank Stock if You Don't Know These 4 Things

One of the core principles of Warren Buffett' s investing philosophy is to "buy what you could understand", or something along those lines. Mr. Buffett obviously understands how financial institutions operate having cleaned up Salomon Brothers and opting to invest in banks through creative and traditional manners. Hey, and the fact is that if he doesn’t comprehend an aspect of a bank's 10-k, 10-q, or any other SEC filing rest assured a call to the CEO, with their counsel patched in, will be answered lickety split.

I still have the mental (what to look for) and physical (access to databases of information) ability to analyze a financial institution having been a former coverage analyst on Washington Mutual, Fannie Mae, and Freddie Mac.  Brutal companies to have built models for, but I wouldn't change the experience for anything as it provided an amazing perspective into the inner workings of these companies and the broader economy. Recently, I went so far as to test whether I still "had it" by recommending JP Morgan pre-earnings on television.

Every day for the stock portfolio I manage for

Do you know what any of this means?