The worst of the worst? Let’s look at Wells Fargo (WFC). (September 14, 2016)
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I want to look at Wells Fargo ( NYSE:WFC ) here and this is why: I don’t want you to buy this. I don’t think it is a deal. The stock has traded down almost 10 percent in a short amount of time. The Banking Index is also traded down 3-4 percent. XLF ( NYSEARCA:XLF ) also traded down. Shoot, everything has traded down, except inverse ETFs, 3 percent. Bank of America ( NYSE:BAC ). I don’t need to keep showing you the percentages. Comerica ( NYSE:CMA ), my favorite small capper bank, maybe it’s a mid-cap, I don’t know. JP Morgan ( NYSE:JPM ). If we could only get the same guys or the right guys in a room we could solve Brexit, Diamond. JP Morgan’s ( NYSE:JPM ) doing okay. Morgan Stanley ( NYSE:MS ), doing okay. Goldman Sachs ( NYSE:GS), really doing okay. By the way, even Citigroup ( NYSE:C ) is doing okay.
So what’s up with Wells Fargo ( NYSE:WFC )? Well if you haven’t heard about it you have had your head in the sand. They had literally thousands of employees who were ripping off their customers by opening up unauthorized accounts. And some of these customers, not some of them, basically almost all of them were getting hit with late fees and this and that. The bottom line is, it wasn’t one or two people, this goes beyond that they have an incompetent CEO or whatever. That would be Yahoo! ( NASDAQ:YHOO ). But Wells Fargo ( NYSE:WFC ), the CEO was on Mad Money last night talking to Jim Cramer. I have no idea what Cramer’s ultimate conclusion was because I didn’t watch it all the way through. To be quite honest I knew what the guy was going to be doing and he did a good job standing up for his company. And, “Oh we have hundreds and hundreds of thousands of employees and this was a small amount.”
Dude, you have got a culture of corruption, and a culture of screwing your customers. This shouldn’t happen and the fact that they are not even coming out and saying we’re going to claw that money back from that scumbag that made all this happen. The fact that they are not doing that; tell me something, your next mortgage, are you going to finance your stuff with Wells Fargo ( NYSE:WFC )? You are thinking about opening up a new bank account, are you going to open that bank account with Wells Fargo ( NYSE:WFC )? Or are you instead just going right down the street and do it with Bank of America ( NYSE:BAC )?
The bottom line is this: This thing with Wells Fargo ( NYSE:WFC ) reminds me of Chipotle ( NYSE:CMG ); with one big difference, CMG ( NYSE:CMG ), the whole E. coli thing, that just kind of happened and maybe they had some practices that had to be cleaned up. How did that happen? Etcetera, etcetera, I’m not getting into Chipotle ( NYSE:CMG ). That just happened, and look what happened to Chipotle’s ( NYSE:CMG ) stock. Look what happened to their name brand, which by the way, I still love Chipotle ( NYSE:CMG ). I would eat there ANYTIME. Love it! But look what happened to the stock. So I’m looking at Wells Fargo ( NYSE:WFC ) and I’m seeing Chipotle ( NYSE:CMG ), only it’s not done going down yet. Think about it this way: Being in financials is not the place to be right now. It’s kind of ticking up a little bit and if Jumpin’ Janet raises rates next week you are going to see the yield on the 10 year go even higher. You are going to see financials jump. You are going to see banks jump. And I would just say that with respect to Wells Fargo ( NYSE:WFC ) you will probably even see that jump too.
But here’s the deal: This brand has been tarnished. Nice stagecoach, I get it. But the brand has been tarnished and I think it will take a long, long time if ever for this company to overcome the black eye that it’s got. Because after what happened with the real estate crash and the market crash and all that in 2006 and 2007. Is there any group of people, other than members of Isis or Al-Qaeda etcetera, etcetera. Is there any group of people that you hate more than bankers. I can’t think of any. So my point is, we all have to do business with some bank, some how, some where. My bet is, this company is going to have a HECK of a time growing it’s revenues, growing it’s customer base. It already stinks to be a bank. But to be in the smelliest bank of a smelly sector is not where you want to be. Their earnings have already been on the decline. They are in single digits anyway. I wouldn’t go anywhere near Wells Fargo ( NYSE:WFC ), nor should you. Think about it this way, If you want to trade WFC ( NYSE:WFC ), here’s your pattern, trade WFM ( NASDAQ:WFM ) instead. They are both channeling stocks. You are probably not going to make money on either one of them. But at least you will feel better about buying Whole Foods ( NYSE:WFC ).
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