My husband and I have a small cd that matured recently. We're not interested in the low rates they are currently paying. We have an account with Sharebuilder who will reinvest dividends at no cost, and are considering buying a good stock with good dividends. BAC came to mind. It seems like a bargain right now. But of course, we're concerned with the headlines we see everyday. We don't want to buy it and then have it cut its' div and then drop like C. Anyway, if you had a little extra cash (not life savings and not the grocery money) would you take a chance on BAC? Or something else?Thanks
I wouldn't buy BAC if I only had enough funds to invest in one company. It is important, especially in times like the present, to diversify your holdings so that risk is minimized. If I couldn't spread my money, I would invest in a broad market ETF.Ron
If the headlines make you a bit nervous, like us all, I would recommend USB instead. The dividend isn't as big, but it is still very attractive. They have extremely low subprime exposure (<5% of their mortgages I believe), but have seen a price decline with the remainder of the sector. They have a 30-year history of annual dividend increases like BAC, but with a better ROE as of late. They also return profits to shareholders through a steady share repurchase plan.If this doesn't convince you, Warren Buffett continues to add to his stake of USB according to his filing in late Feb. (unlike BAC). He also has a larger holding in USB than BAC.
I agree with bornabuckeye, somewhat...I own both BAC and USB in my SEP 401k. I first added BAC about 3 months ago when it started the decline, I bought BAC as opposed to USB at the time because the divvy was higher and I thought they both had about the same exposure to the sub prime mess. It ended up I was wrong. When BAC and USB got really low on January 22nd I contemplated on what to do, add to BAC or add a position to USB, I ended up adding USB, because I thought it now had less exposure to the subprime mess and was really confussed about the country wide buyout (will it help them or hurt them), which I still am confused. This turned out to be a little better (adding USB). However.....if BAC holds true to there divvy, this might be a better long term play, but you will defiantly have a lot of down side risk on the price. I guess it depends on time frame. The longer the time frame you have to hold, the more I would probably look at BAC. Also it would depend on much money you willing commit, if it was small amount, less than $1,500, I would probably put it in USB. If you had more than this amount I might split it between the two, say 75% USB and 25% BAC and try to buy each in 1/3 rds. One strategy I like to use is if you buy in 1/3's, make your first position, then every time the stock moves 5%-10% downward from the original purchase price, fill another position until your totally invested. These are just my thoughts....RHDME, long BAC and USB
kpmom, given the limitations of your question, I think the answer is a resounding 'something else.' There are a couple of lovely REIT's one can buy which have an opportunity for immediate share price appreciation and pay out a bigger dividend than BAC. The reasons are simple:1. BAC, and I know Dale in Woodville is going to hate me for re-iterating this, but BAC's CEO Ken Lewis recently made a statement in which he stated his signifcant fears in terms of customer base, in that even his best credit-worthy customers were throwing their keys at the bank without a second thought, and this was unprecendented in his experience, since BAC hadn't even been engaging in sub-prime loans.2. The FBI is investigating the whole CFC acquisiition so it might not even take place.3. The financials are clearly out of favor with the hedge fund managers, the smart money boys, so the chances of getting anything other than the dividend yield for the remainder of this year are slim to none.4. The CFC deal is looking worse than originally thought by BAC when they made the purchase, so there's more defaulting mortgages, perhaps lawsuits, in the works, which is why the FBI is involved in the first place.5. It's just too risky in my opinion. If you like, send me a private e-mail and I'll give you the name of a REIT endorsed by two different Motley Fool newsletters and Morningstar and Forbes right now.JimBNorman
Kpmom,I agree with the advice you've been given by others here. In other words, invest your money in a diversified manner first, and consider BAC only if you need to add some funds to your Large Banks category. I also agree with the comment that USB may be a better choice these days. As a matter of fact, USB is the next bank stock I intend to buy over the next few days to add to my existing position in it (waiting for some dividend checks to have enough money to do this).Switching to the CFC situation, someone mentioned that there is no penalty to BAC to walk away from that deal, but didn't BAC buy something like 1.2 B shares? While I do not like the CFC deal, and hope it unravels, I am not sure that there is no penalty to BAC.Actually, maybe the best thing to happen is something like the CSE/TONE situation where BAC renegotiates the price it pays for CFC. With all the current disclosures and the FBI investigation underway, what would a reasonable price be for CFC in the opinion of the learned members of this board?
Kpmom --As mentioned, I seem to be the resident bull on BAC. I have been accumulating it on the way down and look forward to reaping some profits when things turn around. It is the 1000 pound gorilla of retail banking and way undervalued.That said, there are some other good choices to consider. I've also been putting away shares of Allied Irish Bank, AIB, one of the babies thrown out with the bathwater (very low prime exposure and lots of growth prospects) and Annaly, NLY, a mortgage REIT suffering from being in an out-of-favor business but with very good management and prospects (the current interest rate environment is perfect for their business model.)Good luck whichever way you go (and let us know.)-- Dale in Woodville
I wouldn't listen to any of these guys. For many reasons:1-Bank stocks are almost the hardest securities to understand. I'd say they're 2nd after insurance companies. If you don't understand something, don't invest in it. From the look of your post, it doesn't seem like you've read all the 10K/10Q of the last 5 years. Unless you read them and actually understand them, keep away, no matter what people on this board will say. Remember that relying on the opinion of someone from this board is relying on the opinion of someone you've never met, who doesn't know you, and don't particularly care wheter you become a milionaire or retire poor.2-The fact that Warren Buffet buys a given stock is no signal whatsoever that YOU should buy it. It merely means that Buffet thinks this stock is good for his portfolio, doesn't say anything about you. Relying on other people's purchase and following them is a sure path to financial loss.3-If you own a house, don't touch REIT. Don't touch any of them. Just think about it, you might very well own hundreds of K$ of real estate, with a small portfolio, you'd better diversify. Until your portfolio is worth as much as your house, stay away from any further RE investment.4-If you're affraid of the headlines, I'd stay away from all fincancials, not just BAC. If you're affraid of a recession, look at the consumer staples or Healthcare companies. These 2 sectors are more recession-resistant than financials. If you don't want to have to look too hard, buy a sector index-ETF. Vanguard's healthcare ETF is traded under VHT, and the Consumer Staples ETF is VDC. There are other ones but these 2 are cheap.
5. It's just too risky in my opinion. If you like, send me a private e-mail and I'll give you the name of a REIT endorsed by two different Motley Fool newsletters and Morningstar and Forbes right now.JimBNorman Not sure where you would be investing your money (assuming a taxable account since your CD just matured) but there are different tax treatments for REIT and a dividend from BAC, USB or any other corporation that you should consider before purchasing a REIT. Somewhere on Fool.com there is some good information about the tax consequences. flickib41
Here is one link I found:http://www.fool.com/investing/dividends-income/2007/02/26/the-reit-stuff.aspx?terms=REIT+TAX+info&vstest=search_042607_linkdefault
To quote Malcolm Forbes "The only thing worse than paying taxes is not having money to be taxed"
BAC pays a healthy dividend that we hope/believe is safe.It seems a safe place to park long term money.Warren Buffet has bought BAC and it's also an Income Investor pick (as mentioned in the link below:http://www.fool.com/investing/value/2007/10/25/warren-buffetts-priceless-investment-advice.aspxSo I think you would be in good company.What to say about the headlines:Today "Wall St soars over 3 percent as Fed adds liquidity". Yesterday it was "Stocks fall as recession and credit fears linger". Tommorow "Market slides as earnings drop!"The next day "DOW rises on earnings surprises"Coming next week "Recession fears cause stocks to tumble"Remember the papers HAVE to write something EVERY day. You can safely ignore most of the chatter.Long on BAC (It's doubled since I bought it in 1999!)
"The only thing worse than paying taxes is not having money to be taxed" Ga1Dawg,Thanks for the reminder. I was getting ticked about the large check we have to write this year......nice to be reminded we kept over 70%.WF
WyneFool: Thanks for the reminder. I was getting ticked about the large check we have to write this year......nice to be reminded we kept over 70%.LOL. I may consider including a love letter to the IRS/US Govt with my tax return. Dear IRS, how I love thee. THANK YOU so much for letting me keep 70% of the money I earned! What a most gracious gift. How can I ever repay you? I know, how about state taxes, and sales tax, and gasoline tax, and property tax, and hotel tax, and... oh nevermind, just take it all! Oh how I love thee, my Government!
Well I don't know about y'all, but I'd be happy to send off my check to the IRS if I thought I was paying for education, health care, jobs and job retraining and repairing our infrastructure instead of the long list of Bush/Congress follies!-- Dale in Woodville
Dale,I'd agree with you except I just checked the US Tax tables. I'm not a millionaire, just another working stiff, but for the same income I have to pay taxes on this time, including the AMT, I would have had to kick in an additional 8% under the Clinton administration. Based on income of 2 working people in a major metro area. Current rates - 28%Under Clinton - 36%Under Bush 1 - 28%I would go back further but would have to start indexing down for inflation. WF - hoping not to get flamed because this is on the BAC board
WyneFool --We probably should take this off line or two the lounge but I would like to point out that Clinton did what no other president in recent times has done: paid down the debt. The current Yahoos are mortgaging the future the same way consumers who run up their credit cards are doing. There always comes a time to pay.My only point is that I'd be a lot happier if the money were spent on Americans and our problems.-- Dale in Woodville
I would have had to kick in an additional 8% under the Clinton administration.Now your kids will have the privilege to pay that amount when they grow up. How nice of you to leave them such a gift!
Now your kids will have the privilege to pay that amount when they grow up. How nice of you to leave them such a gift! Stop, folks. There is a "great" board called Political Asylum, where people can shout the same old arguments and cliche's past each other.
Current rates - 28%Under Clinton - 36%Under Bush 1 - 28%I would go back further but would have to start indexing down for inflation.Just for the record, you don't have to index for inflation when you are talking about percentages.Dollar value yes, highest prices ever, yes, but 28% is always 28% no matter what the dollar is worth.Mark
"It seems like a bargain right now." Always ask yourself why. Check the fundamentals and use the charts to pick your entry point. In the long term 3-4 years, I think you'll do well. Right now expect financials to be volatile. Currently, I am making a short play (covercall) on BAC in my IRA. I purchased 400 on 3-6 for $36.25 and sold 4 March 37.5 contracts at $1.5, which nets me about $589. The stock closed down at $37.02. Another play I made was to buy 700 shares of SKF Ultra Shorts, a fund you can play as a stock, NOT for the weak of heart. Best to You.
I have been reading a bit about BofA at Wesabe.com - many customer complaints for years about that bank as well as a few others (WaMu), mostly the apparently predatory overdraft policies issue. A lot of dissatisfaction with BofA over time can't be a good thing.
I have been reading a bit about BofA at Wesabe.com - many customer complaints for years about that bank as well as a few others (WaMu), mostly the apparently predatory overdraft policies issue. A lot of dissatisfaction with BofA over time can't be a good thing. Good luck finding a bank for which there's no complain. The only company who's clients don't complain is Apple, and honestly, it has more to do with Apple clients being Stepford residents than the company giving that great a service.
Now your kids will have the privilege to pay that amount when they grow up. How nice of you to leave them such a gift! Alas, I have no known spawn. I've been trying to save for my own retirement since Congress is determined to give away all of the Social Security Trust Fund.WF
The only company who's clients don't complain is Apple, and honestly, it has more to do with Apple clients being Stepford residents than the company giving that great a service.I had noticed that. I think people who buy from Apple have to sign an agreement that they'll tell the world how happy they are with their purchase.It's almost like they're trying to convince themselves they made the right choice.Strange.Andy
You guys are unbelievable. Bear Stearns just sacrificed or killed their share holders. Makes me think of "Kenny Boy" and ENRON. Who do we blame this one on, Clinton, or how about Reagan? What about BAC, GS, and so on?Should I dump these stocks or sit on them? How about some HELP in this discussion board?KC
Kahunacarooner,Seems to me Bear is nothing at all like BAC. Their business models are different. The size and scope of their businesses are different. I doubt that a diversified bank the size of BAC will suffer the same fate as Bear but who really knows? Certainly the bears on this board don't know. Neither do I.JP Morgan is quoted as suggesting that if the market is keeping you up at night you should "sell to the sleeping point." To own stocks you must be an optimist. I'm still buying healthy banks every month and plan to continue doing so as long as prices remain low and I have a job. Maybe the economy will collapse and I'll lose it all. Somehow I doubt it but if I do money will be worthless anyway.
From today's WSJ: "To be sure, making any move right now requires great fortitude, and some of the most potentially profitable opportunities carry plenty of risk. A prime example is Bank of America Corp.'s stock. Bank of America holds a big portion of the nation's bank deposits, and bank-stock analysts and financial-service mutual-fund managers generally agree that the Charlotte, N.C., behemoth will survive this upheaval and emerge stronger. The stock has slumped to less than $36 from a high approaching $53 in October, and the dividend yield is enticing at 7.1%.But Bank of America is in an industry buffeted almost daily by sour revelations that continue to drive down bank-stock prices. The housing crunch seems to be intensifying and, thus, there's risk to bank earnings and their dividend streams. That makes the shares risky in the short- to medium-term."
Thanks, guys. I am in the process of an ocean area So.Cal. home purchase and the banker who is handling it is the v.p. in charge of loans; as in they don't use independent brokers, and don't make "dumb" or risky loans, and he said he is buying BAC if it goes down and if it doesn't go down. He recommended it and he is in no way associated with B.of A.Kc
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