Wednesday, February 16, 2011

The Importance Of Understanding The Bigger Picture

A few weeks back after the banks reported earnings, I compared the reserve rates for the top four banks.  Clearly, WFC stood out as having a lower reserve as a percent of total loans and leases.

With the recent and sudden departure of the WFC CFO rumors began circulating as to why Howard Atkins left a high paying job, very suddenly and at a relatively young age. Well today one of the best bank analysts is shedding light as he questions the validity of WFC's disclosure process.

"The departure of Atkins, we are led to believe, was not merely the result of personal issues, but reflects an ongoing internal dispute within [Wells Fargo's] executive suite regarding the bank's disclosure," 

There is a lot of noise in the market right now.  Bank stocks seem to catch and endless bid but the problems have not gone away.  Understanding and staying focused on the bigger picture, beyond the day to day noise is critical.  You are better prepared to understand how to respond to the WFC news today and determine if the sell off is an overreaction or in fact true pricing of real risk at WFC.


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