RSAAKKS

Financial Stock Valuations: The Mirror Image of Tech Stocks in '99?

Your rationale for holding WFC will most likely prove correct, although timing for realizing any meaningful returns is year's away. It will depend on: 1. How soon the mortgage business and housing market begins to stabilize 2. General economy has to show signs of REAL recovery, meaning employment starting to increase and corpoarte profits beginning to rise. Until we see such recovery, loan protfolios of banks will remain a drag causing more write offs and losses. Finally, interest rates have to remain at reasonable levels, 10 yr treasuries below 5%. If all these happen, WFC will go up 4-5 fold. If even one of the three conditions remain negative, bank stocks will go no where, and market will have tough time crawling out of this hole.