RonB

Get Ready to Short the Banks

Ahh, another article desparately written by someone who missed the rally and wants a lower entry point. Full of broad-brush generatlities. Specifics matter here. Wells Fargo is a good example. Wells has pre-tax pre-provision earnings power well above $40 billion. It will do $40 billion this year. In a more normal environment, after the current spate of writeoffs has subsided, provisions will be under $10 billion. A $10 billion provision level would result in after-tax income of around $4.20 to $4.30 a share. At a historically low PE multiple of 12, you have a $50 stock price. Wells is now trading at $30. Which is why it is the largest holding in my personal and client portfolios, and it is why Warren Buffett and Prem Watsa own so much of it.

Ron Beasley
Investment Advisor
rwbi.net