Is WELLS FARGO still a GOOD INVESTMENT?
Today, I closed some positions on $MS and reinvested the profits in $PE . The markets in general is having a great day with the $SPX500 up by 1.20% . As for my investments, they are doing much better than that especially with $AAPL $BAYN.DE and $GS all up by more than 3% and $SWKS up by more than 4%. $FB is also having a great day after its announcement of its cryptocurrency, Libra(more on that later).
Now let's talk of $WFC . Is it at a good price? YES. Should you buy it? VERY HARD QUESTION $WFC is the fourth largest bank in the US after $JPM $BAC and $C and ahead of $GS and $MS . Each of these banks have different business models. It is very important to understand that. Each one of these are targeting different customers. $WFC is focused on retail banking having the largest number of branches in the US, $BAC does the same thing as Wells Fargo except that they also have an investment banking division. $JPM does the same thing as Wells Fargo and Bank of America but they have an investment banking segment, a custodian banking segment and are going international. $C is mostly international. Wells Fargo and Bank of America focus on the US market. $GS is focused on investment banking, trading and market making. $MS on investment banking, trading and wealth management.
Wells Fargo is an amazing bank which have been in operations for more than 150 years. They are the number one bank in 13 different states but in 2016, a scandal ruined the business of the bank. The management, at the time, told employees that they would be rewarded by the number of new accounts created. The employees started creating fake accounts. Since then, the growth of the company has been stagnant. Nevertheless, today, I'll say that the stock is at a great price. The market overreacted on the news. That's why I've been buying more shares of this company as the price kept falling. I don't consider it a mistake but it wouldn't have been something I would have advised my younger self 3 years ago. The reason for this has nothing to do with the fake account scandal. It is about the growth of the company itself. $JPM is a much better bank compared to $WFC and I should have invested more in $JPM instead. So will I sell everything and invest in $JPM ? No, because I believe that the company will do well in the coming years and that I can exit at a better price. But eventually, I would like to have a much bigger position in JPMorgan Chase.
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