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Author: ByrneShill Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4743  
Subject: Re: BAC- READY TO MOVE UP! Date: 2/18/2013 12:09 PM
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I'm not sure you understand Bill's problem.

When Bill bought at 40$, the market cap was a monstrous 240B$. At the current stock price of 12$, the market cap is 130B$. To get back on his feet, the stock price would need to get to 433B$, which is more than apple is currently worth. The dilution we went through to acquire MER and Countrywide will haunt pre-2008 investors forever.

Of course, Bill could cost-price average, but there's 2 problems with this scenario:
1- Nothing promises that BAC will outperform Bill's portfolio. If BAC underperforms the rest of his port OR underperforms treasuries, he's actually piling losses on BAC;
2- Buying stocks at 12$ doesn't erase his 40$ purchase. On paper it makes it look less bad, but when you really think about it, even if the stock was to double overnight, that 40$ purchase is still a dog.

Now, I'm fairly certain Bill bought in part because BAC was a II recomendation from TMF before the big 2008 plunge. Those schmucks were actually getting paid for recommending BAC, JPM, LYG and NZT and some other laggards. Funny how BAC was a good buy in the 40-50 range but a stinker at 5$ for these guys. I guess paid advice is worth about the same as free advice...
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