I should know

Writedowns and Capital Raised by Financial Firms

You’ve got to buy when everybody says "sell", and sell when the crowds say "buy". While watching the stock market and getting caught up in the dramatic rise in price and the buying frenzy, I asked my stock broker about Apple stock. He said it was a great buy so I bought 500 shares on 9/18/06 at $73.81 each or a total of $36,905. On May 14th 2007 my broker called and said the stock was up to $109.62, did I want to buy some more. NO way I said, too costly. Through Spring, Summer, and Fall of 2007 Apple stock was going through the roof; it was skyrocketing, it was Wall Street’s new favorite stock. I was really upset with myself because I felt like this express train to financial nirvana was leaving without me. I got caught-up in the herd mentality (sounds a little like the real estate market, doesn’t it?). On December 11th 2007 I frantically called my stock broker and told him to buy 1000 shares; I didn’t care what the price was, I wasn’t going to be left out of this market, these rising prices. The price was $194.75. In February and early March I was tired of the roller coaster ride and was ready to dump everything at about $120 a share; more herd mentality. I still own the stock, I like the company. Wells Fargo is a GREAT, well-run company that’s been around for 156 years. They have a well known and well respected brand name as well know world-wide as Coke and McDonalds. Sure, they are getting beat-up and will suffer additional losses due to the credit and real estate meltdown, but they will be left standing and strong, ready to gain market share from their competitors. I think Warren Buffet is its biggest investor and Wells Fargo & Co is his third most popular stock. I own some WFC stock and I’m not happy about its price reduction, but like Warren Buffet, I’m in for the long haul. When asked “When is the best time to sell a stock”, Warren Buffet answered “Never”.

E*Trade, Wells Fargo and Downey: 'Subprime' Problems With Prime Loans

As I posted before on part of this subject, the home equity loans that Wells Fargo is concerned about are not necessarily subprime loans due to credit scores, they are "less than prime" because they were originated by third party sources, mostly under supervised, less than trustworthy brokers, the source of 90% of all subprime loans whether firsts mortgages or seconds. The loans that were originated and processed directly by their retail origination platform are very well underwritten and high performing loans. Wells Fargo did not do even one of those toxic Option ARMs because of Wells Fargo's conservative underwriting and their believe that those loans were never in the best interest of their customers. Wells Fargo was the number one mortgage originator for almost 10 years, but gave up that spot because they were unwilling to put their customers in exotic toxic mortgages. They knew they missed out on at least 25% of the origination opportunity during '03 to '06, but the decision and their high ethics are proving correct. They’re taking their lumps on these less than perfect home equity loans that they funded for brokers and a few other brokered-in loans, but they have far less exposure than most other major banks and mortgage companies.