I Wish I Had Bought Bank of America Stock

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%.

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%. 

I wrote at the time:

"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 believe 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.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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  • Rob

    July 17, 2008

    You're kidding yourself if you think that you can time the bottom or the top. Hindsight is always 20-20, and with these bank stocks, you will always be richer if you kick yourself that if you try to catch a falling knif.e

  • Sam Cass

    July 17, 2008

    I believe in buy low and sell high. Bank stocks are low. Will they go lower, perhaps? But to make real money I do believe that you have to be savvy and buy when people are selling and vice-versa. Thanks for the comment.

  • Thomas

    July 17, 2008

    The 11% percent dividend looked pretty attractive to me. No telling what will happen with the stock though.

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