frcf

The $37B Roubini Forgot at Wells Fargo

Another point that Mr. Roubini seems to have forgotten is the banks underlying earnings. The pretax preprovision earnings of banks will offset most of the credit losses. Wells will likely earn $60B in the next 2 years!!!

Wells Fargo: A Growth Stock During the Great Depression?

Buffett mistakes have been small. WFC is a huge "bet" - I am sure he himself would rather refer to it as as a sure thing. Wells is now his 2nd largest holding:

www.dataroma.com/m/hol...

The chances are that with more additions and rising stock price, wfc may in fact surpass KO and become his largest holding. He actually spent more money buying WFC shares in 2007 than JNJ, and that's inspite of the fact that he already held a large chunk of wfc. This is buffetts proverbial fat-pitch, and of course other investors are completely oblivious to it. But that is what makes him great. He sees things before everyone else does. He saw the credit crunch comming, he saw the disaster waiting to happen with derivatives and the very likely real estate bust. And yet, he kept adding to his wfc position. He knew that wfc's earnings were not peak earnings - that if anything, the credit boom had intensified competition, thereby making life harder for conservative and well managed banks like wfc. Ironically, the credit crunch has now given wfc an opportunity to increase market share and benefit from rising margins while other banks are selling assets to shore up capital.

Buffett is a genius.

Wells Fargo: A Growth Stock During the Great Depression?

I have a feeling Buffett would have a very different view than some of the negative posts above, as he has been loading up on WFC shares both in 2007 and 2008. This is a very strong bank which will not only survive but gain considerable market share. They collect low cost deposits and lend them at what are now much higher rates. Their return on equity is going to shoot up. Along with a few other strong survivors, they are going to have the whole market to themselves! This indeed is a growth stock even in tough economic conditions.

Remember, Buffett is never wrong on his big bets.