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Strategies & Market Trends : Waiting for the big Kahuna

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To: Real Man who wrote (80566)	7/16/2008 2:26:13 PM
From: sandeep	Read Replies (1) of 94695

Let's look at WFC since you pointed out that earnings were lower and that the company still increased the dividend. Revenues rose from $9.89B last June Q to $11.46B this June Q. That is a gain of 15%! That is a huge increase. However, the profits went down 23% QoQ. Why is that? The cost of doing business went UP dramatically. The cost of doing business went up partly because of mortgage defaults. BUT I think that a huge part of it is because of the ridiculous cost of credit insurance. The bank makes money when it loans a lot. It has to insure such leverage. The cost of insurance went up dramatically. And hence the loss in profits. This is real damage done due to bad psychology...

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