Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Wells Fargo Outperforming SPX but Underperforming KRE

|Includes: KRE, Wells Fargo & Co. (WFC)

Cramer wrote on Thurs afternoon:

"Finally, Wells Fargo, the real bellwether of the banks post-Volcker rule that can hurt Goldman and JPMorgan Chase, has been outperforming the market.  I think this outperformance, noted first by Doug Kass, is so important that it tempers my negativity -- and that's an awful lot of negativity to be tempered."

While WFC has been outperforming SPX since Dec 14, the chart below shows that it clearly has been significantly underperforming KRE, the regional bank etf, since mid-Oct. 

I mention this not because I've noted the relative strength of KRE in my recent posts, but rather to make the general point that the simplest way of seeing how a stock is doing is just to compare it to a relevant comparable on a chart. 

I tried to make the exact same point by showing charts of AAPL vs GOOG in this Instablog, since that comparison was the subject of a recent article by another contributor on which many commenters exchanged their fundamental opinions regarding what might happen two years out.

My basic point that I'm trying to make in both examples is that a stock may seem to have the most compelling fundamental story in the world, but if it is losing relative strength to some alternative investment over a reasonable period of time, for whatever reason the market doesn't seem to care.

Not owning the other security that is outperforming the one you like is the latter's opportunity cost.  This cost is very simple to see on a relative strength chart.

You may feel that you really have an edge on a few stocks you really know very well, perhaps a feel for how they trade, if nothing else, if you're focused on them closely enough.  Just remember that thousands of highly paid professionals feel the exact same way about every stock in SPX. 

Left click on chart to enlarge.