For many investors, 2020 has been an incredible year. Several sectors are well on their way to gaining more than 20% this year, and tech stocks in particular have crushed it. But it hasn't been all gains this year; several sectors continue to lag, and many financial stocks are down sharply.
On the Nov. 10 edition of "The Wrap" on Motley Fool Live, host Jason Hall talks about one of his worst-performing investments of the year: Wells Fargo (NYSE:WFC). Not only are Wells shares down sharply since the beginning of 2020, but they're still also below levels from late March, when almost every other stock trading was at fire-sale prices. Yet despite Well's problems, Jason says it's staying in his portfolio.
Jason Hall: For me, one of the worst stocks that I bought this year, and I want to call this out for a couple of specific reasons, but first of all, I bought this stock on March 18. It's down about 15% since March 18.
Brian Feroldi: That's hard.
Hall: How in the hell did I do that? You could probably find 1,000 pretty good companies and 700 of those are up a lot since March 18. For people that don't know, that's five days before the S&P 500 bottomed. That was a great time to be buying stocks. The stock that I bought was Wells Fargo.
Danny Vena: (Laughs) That's why.
Hall: (Laughs) Yeah. There you go. I probably don't have to say anything else, but I'm going to anyway. What I'm going to say is simple.
This is a reality that the banking sector continues to have real concerns. If you think about everything that's going on, interest rates have collapsed, there's a lot of worries about the economic implications of a protracted pandemic. Even with the vaccine announcement yesterday, it doesn't really change the trajectory that most people are aware of, that it's still going to be next summer at the soonest before things start to look more normal, because it's going to take a hell of a long time to make enough effective vaccines and enough people decide to get vaccinated for things just to return to normal.
Then, by the way, Wells Fargo has just been a dumpster fire of one accident after another in terms of just stupid stuff. They had a bunch of employees committing fraud with federal loans that they were claiming, pretending to be customers, just this litany of things.
I haven't sold. The reason I haven't sold is I think it's 60% of book value or whatever it trades for and the fact that their lending practices and the quality of their lending operation continues to be so good. I'm going to keep holding, and I may buy more because I think it's a great business. So great expectations and all that. This is definitely a case of messed up expectations. There's no getting around that whatsoever. No getting around that at all.