Five days ago I reported that Bank of America's dividend was at 11% and that the stock might present a good buy. Did I listen to my own advice? No. Today, BofA was up more than 20%.
"So who is an investor to believe? I personally think Bank of America is a pretty savvy operation and that they knew what they were buying with Countrywide. They probably were able to model a range of losses that they would experience with their porftolio and included that in their business projections. Surely, their data is more accurate than the models created by Wall Street bankers who have no first-hand experience with the mortgage markets.
I also believe that if you look at Bank of America's stock, it is back to its 2001 values. That means that all of the gains of the last seven years, the height of the mortgage and housing bubbles have been wiped out. I also think that's reasonable."
I still belive that. I expect a few more bumps in the road with financials. I don't think the mortgage or overall credit crisis is fully over. Maybe sixth or seventh inning and banks will take a few more hits. But I also believe that markets have priced most of this in. The near insolvency of Fannie and Freddie certainly lowered future expectations.
Is the BofA still a good buy? Maybe, but not as good as it was a week ago. I'm still kicking myself for not buying.
Related Articles:
Bank of America to Cut Countrywide Bid? by JRodgers - May 06, 2008
A Special Present for Countrywide Employees by JRodgers - Jul 11, 2008
Bank of America is Overpaying for Merill Lynch by JRodgers - Sep 15, 2008
Bank Stocks Worth Taking A Look At by Sam Cass - Aug 18, 2007
Curb Your Enthusiasm by Herman Kline - Sep 19, 2007
Big Opportunities at Smaller Banks by Sam Cass - Nov 28, 2007
Are Banks and Financial Institutions a Buy? by Sam Cass - Jan 17, 2008
Journalist and Investor Doug Kass Says Buy Financials - Not Me by Sam Cass - Jan 14, 2008.
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