Bank of America (BAC) NewsBite - Analyst Comments Hurt BACThis from Market Intelligence Center:Posted on Monday, February 25, 2008 10:09 AMBank of America (BAC) opened at $42.27. So far today the stock has hit a low of $41.85 and a high of $42.40. BAC is now trading at $42.11, down 0.49 (-1.15%). After hitting a one-year high of $53.15 last February, the stock hit a one-year low of $33.12 in January. Shares of BAC are trading lower with other banks this morning after an analyst at Oppenheimer cut earnings estimates for many major banks, predicting bank losses will be the highest in the past 20 years or more due to greater individual defaults on mortgages and other loans. The analyst cut BAC's first-quarter EPS estimate to $0.92 per share from $1.01 per share, and cut BAC's fiscal-2008 estimate to $3.65 per share from $4.10 per share. Technical indicators for BAC are bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating. If you’re looking for a hedged play on this stock, consider a March bear-call credit spread above the $45 range. BAC hasn’t been above $45 by more than a few cents since December and has shown resistance around $44 recently. This trade could be risky if the US economy turns around, but even if that happens, this position could be protected by resistance BAC might find around $45, where the stock peaked in late January.
What's going on now? Nobody knows.I suspect that we are teetering on the edge of a recession. What happens when we are in a recession? People get laid off. That translates into no money for paying bills. When that happens the banks that hold the credit card debt and the home equity loans and the mortgages, do not get to collect the principal and interest payments.Remember that the market and everyone in it is trying to predict what will be happening in the coming months. Every little tidbit of information is magnified multiple times in this kind of environment.For yourself, you should figure out what it is that you are trying to accomplish by buying shares in this company. If you want to play the Wall Street game and eek out small gains by day trading, be my guest. If your timeframe is a bit longer - say three to six months out - then this kind of data is critical to you and you will make your decisions based on what you read in the tea leaves. If you look even further out - say five years or so - do you believe that BAC will be in business as a profitable concern by then? Then you can ignore all of this noise.Your money, your sleep, your call.
I still don't recommend BAC this year unless one is just interested in the attractive dividend yield. CFC's mortgage business has been reported to be worse than originally thought. BAC now has the dubious privilege of having all this bad business on their books, and can expect more and more defaults on mortgages and credit cards as we slip further into inflationary and recession possibilities. Indeed, it wasn't too long ago that I posted on Lewis bemoaning that even his most credit-worthy customers were throwing their keys at the bank without a second thought, unprecedented behavior. This statement was made before the CFC acquisition. BAC is now trading at around book value, meaning the smart money, the big money boys, the hedge funds, aren't pumping money into it.JimBNorman
JimBNorman sez --"I still don't recommend BAC this year unless one is just interested in the attractive dividend yield."Well so far the appreciation has carried the shares I've been accumulating in falling knife fashion solidly into the black.I don't pretend to understand the intricacies of finance but I've read that the CFC deal may have to do with taxes and that they've done this before successfully."Indeed, it wasn't too long ago that I posted on Lewis bemoaning that even his most credit-worthy customers were throwing their keys at the bank without a second thought,",And indeed if you post this one more time, Jim, I'll throw up and throw my keys at the screen. :-)-- Dale in Woodville
DaleDon't get too mad a Jim. He is actually necessary for this board. We might not agree with everything he says, but I think he prevents us from seeing everything through "rose colore glass", which can be very dangerous in the investing world.
Not mad at all (sorry if it sounded that way.) And I certainly agree we need both sides on our boards. I guess what I should have suggested is that mentioning the Lewis quote once is probably sufficient. Trust us, Jim, we'll remember what you said.-- Dale in Woodville, long, way long, BAC
WASABI1968: We might not agree with everything he says, but I think he prevents us from seeing everything through "rose colore glass", which can be very dangerous in the investing world. Isn't reading any newspaper for the last few months enough to prevent seeing things through rose-colored glasses???
I don't need the newspaper. All I have to do is look at my pathetic portfolio. My rose-colored glasses have been ripped from my face and placed under the wheels of a truck, never to be used again. Isn't reading any newspaper for the last few months enough to prevent seeing things through rose-colored glasses???
As far as reading a newspaper preventing one from seeing the world with 'rose colored glasses.' no, in my opinion, this doesn't prevent one from perceiving the news the way they see fit. A discussion board is generally populated with like-minded individuals who re-inforce each others perceptions. Be thankful for the bear with the guts to give you the dissenting view. I am not a journalist. I have no pretense whatsoever at objectivity. I interpret the news the way I choose to, and only present my opinions because I feel obligated to my fellow Fools to do so. I fully expect more often than not to get 'tarred and feathered.' This happened to me for a year being the lone bear on the SCSS board. Now my views on SCSS stated last May are the official Motley Fool position concerning this stock. It dropped over 75.5 percent since the last HG recommendation.If you go back, way back, on this board, I was a bull! But I've had a change of heart based on the evidence. The financials as a sector are clearly, clearly out of favor with Wall Street. BAC buying Countrywide has to absorb this business this year, which is worse than expected. It inherits a ton of bad subprime business and lawsuits resulting from it. There are advantages to the purchase in terms of tax write-offs and acquiring some good business. In the long run, over three-to five years, I think the acquisition will be positive. But I don't see any chance of share price appreciation for BAC stock this year. None. Nada. Zippitedy-do-dah.That doesn't mean one can't buy it, enjoy the dividend, and wait a year and a half or two before the stock price begins to appreciate if this fits in with one's investment philosophy. I'd prefer to put my money into hot sectors such as Technology which is thriving in this economy, and wait for a year-the stock price will be what it is roughly today. Then maybe buy if things look better. If one wants a high dividend stock, there are some lovely REITS out there with higher dividend yield plus share price appreciation possibilities. Good luck to all my fellow Fools long BAC. I hope I'm wrong.JimBNorman
I'd prefer to put my money into hot sectors such as Technology which is thriving in this economy, and wait for a year-the stock price will be what it is roughly today. Then maybe buy if things look better. If one wants a high dividend stock, there are some lovely REITS out there with higher dividend yield plus share price appreciation possibilities. ********************************************JimBNormanI do love the dividends from BAC as well as my REITs and I can wait for the stock price to appreciate, and I do wish you good luck with your tech stocks. I also am very thankful for your dissenting view of BAC on this board, but why (just curious) have you chosen to spend your time on this board as opposed to spending your time on the stocks you have chosen to invest?Dawg (inquiring minds want to know)
JimBNorman: As far as reading a newspaper preventing one from seeing the world with 'rose colored glasses.' no, in my opinion, this doesn't prevent one from perceiving the news the way they see fit. A discussion board is generally populated with like-minded individuals who re-inforce each others perceptions. Be thankful for the bear with the guts to give you the dissenting view.This is ALWAYS the position of the board bear, not some new thought. But usually it comes at a time when the stock is running up with irrational exuberance, typically fueled by rosy media coverage. You simply don't see that with regard to the financial sector right now. So maybe on this board people tend to have a more positive view, but I think many make the mistake of assuming that this one particular message board is the only place that people get information, and if it weren't for that one courageous bear taking a contrarian view, nobody would ever see anything negative or risky about the stock. In some cases, I think that's probably not that far off (e.g., stocks that are poorly covered or are universally believed to be can't miss high flyers). In this case, the instability of the financial sector is the overriding theme of so much front page news coverage, I just don't think it applies. I am not a journalist. I have no pretense whatsoever at objectivity. I interpret the news the way I choose to, and only present my opinions because I feel obligated to my fellow Fools to do so.This doesn't mean you aren't objective. I'm sure you mean to argue that you are. But you can still have an opinion, and you want to share it. I think that's dandy.I fully expect more often than not to get 'tarred and feathered.'But you also seem to get quite a bit of self-righteous pleasure from making yourself into a martyr.This happened to me for a year being the lone bear on the SCSS board. Now my views on SCSS stated last May are the official Motley Fool position concerning this stock. It dropped over 75.5 percent since the last HG recommendation.I think that's great, and you are clearly quite proud of it. I hope you cashed in with appropriate shorts or options, because you deserve to be financially rewarded. But don't mistake being correct for infallibility. If you go back, way back, on this board, I was a bull! But I've had a change of heart based on the evidence. The financials as a sector are clearly, clearly out of favor with Wall Street. I completely agree. They are "clearly, clearly out of favor." And it seems pretty clear to the mainstream and that is how it is covered in the media. So that's why I'm saying I don't think the bear argument is so heroic here. I think you are probably correct, but I also think your argument is pretty widely available.
But I don't see any chance of share price appreciation for BAC stock this year. None. Nada. Zippitedy-do-dah.The market does not agree with you. If there is no chance that the stock will rise, Jan. options for the current price would be worthless, right?
Ga1dawg, if you read the RIMM, NFLX, AAPL, SAY, DIS, MVL, MCD, boards, I am inordinately bullish. I intend to start publishing on the PBR, VZ, and DRE boards shortly with bullish news concerning these issues. I am currently only publish bearish on BAC and SCSS. I own the bed and think it is the best product on the market, and am a former shareholder. But I have made the decision to pretty much abandon the regular discussion board for SCSS in favor of the one in the Hidden Gems Newsletter. The quality of discussion is significantly higher.Inquiring minds have a right to know.Now, to call me a 'martyr' is engaging in 'pop pyschology' at its most ludicrous. I derive no enjoyment from being a contrarian. As a one-time BAC bull, this is why I am intrigued by the stock, especially now after the Countrywide merger. I enjoy sharing news and reading the bullish opinions. I do not have a monopoly on wisdom. I am aware that the Fool is bullish BAC in the Income Investor Newsletter. I intend to buy back in when I feel the timing is right, and I'm hoping that by reading comments and exchanging views with fellow Fools my opinion will change and I can join the club. No one wants this more than I do.I'd love to get into BAC and have the stock price go up to the 60's and then get the benefit of the dividend as well as signicant share price appreciation. Right now all I see from an investment in BAC is the dividend. It's not enough when I can, and have, enjoyed a much, much higher percentage yield in certain stocks that have gained or will, in my opinion, gain significant share price appreciation.I invite all to any of these boards to share views on these stocks with me and many savvy knowledgeable Fools from whom I have learned a great deal in regards to these issues.JimBNorman
I intend to start publishing on the PBR, VZ, and DRE boards shortly with bullish news concerning these issues... I invite all to any of these boards to share views on these stocks with me and many savvy knowledgeable Fools from whom I have learned a great deal in regards to these issues.*********************************Don't follow the other 2 but you may be by yourself on the DRE board.(2 post from 7/2006 to present) P.S. I never called you or anyone else a 'martyr'!Good luck with your tech stocks.Dawg
JimB sez --"I invite all to any of these boards to share views on these stocks with me and many savvy knowledgeable Fools from whom I have learned a great deal in regards to these issues."You sound like a sensible fellow, Jim. I must have thought so before because you were already in my favorite Fools list. :-)And I too am a Navy brad but me mum stayed home while dad was at sea...-- Dale in Woodville
Dale, I loved being a Navy brat. My father was a Public Information Officer and wrote many speeches for Senator McCain's father, Admiral McCain, when he was at the Pentagon. This was also during the Cuban Missile Crisis. We were in San Juan during the Dominican Republic crisis of '64, and LBJ sent in troops to Santo Domingo, the first time the Green Berets were engaged, I believe. My father was among the youngest Lt. Commanders at the end of WWII. He served during Korea and Vietnam, though he wasn't posted in either country. The experience exposes you to foreign cultures and helps you develop an appreciation for them, and you make many wonderful friends though every three years or so you move on and have to make new ones.Ga1dawg, I phrased my answer badly. It wasn't you that called me a martyr. Someone whose name escapes me at the moment stated bluntly that I got pleasure out of 'being a martyr.' Ludicrous!Another aspect of being a board 'bear' is that you get the opportunity to change some minds concerning a stock. This happened for me on the SCSS regular board. I like to think I've saved some folks some money there. The unfortunate aspect of it us that if that a bull comes around to your point of view they simply leave the board and stop posting-you never here from them again.But, and this should be of particular interest to this board, and I alluded to this in my previous post, Jimbo's mind changes depending on what is posted. I was originally staunchly 100% bearish on the Countrywide acquisition until I read the posts of BAC longs on this board and most particularly, engaged in some private e-mail traffic with my very good friend Anuragupta concerning this. Anurag and the board changed my mind.Though I think it's going to be an extremely rough year absorbing CFC's business into BAC this year, I believe in the long run it's going to be a very positive step forward for BAC.I've got January 2009 marked on my calendar as the time to 'count my trumps' and consider buying back in here. It's always tough to try and 'time the market,' but I'm on the launching pad about this time when I expect the stock to be trading at around $42-45, where it is now, and then if I feel BAC has its CFC 'ducks in a row,' and customers stop tossing keys at the bank, if Lewis is more positive in his remarks; I'm jumping in and expect the stock to shoot up through the fifties to the mid sixties, maybe hitting seventy.So I have absolutely no problem with anyone choosing to hold here until times get better. I was constantly advising sell on SCSS since the stock price kept plummeting and there was no dividend being paid.Best,JimBNorman
god bless mccain. I read his book while I was in iraq about his years as a pow. this post is for jim. god bless your father too. this country is great for men like your father and mccain. but now to the investing side... I am a young investor that believes in long term holdings. If you feel bank of america is gonna go up in due time. why not add more during this down turn? I am a member of income investor and I read once that if there were no market down turns divedend investors would lose to the market. I believe bank of america is and always will be a great bank. and getting a 6.8% yeild is amazin they will bounce back as they did in 90-91. thanksJason
Jason, perhaps I should make my position on BAC clear. I fully expect it to boucne back and be profitable and a stock worth investing in. That's why I continue to hang out here on this board-exchanging views on it, as I intend to go long on it when the timing is right.That being said, I do not think I'll be jumping back on board ship anytime soon, perhaps not until the end of the first quarter of 2009. Although I feel the CFC merger/acquisition will untimately be successful, it's going to take them all of this year and perhaps longer to absorb CFC business onto their books and make the bad business go away. Thus, simply put, means I don't think anhyone can expect to make any money in terms of share price appeciation on BAC for at least a year, maybe closer to a year and a half, where I can think of three technology stccks off the top of my head which will do better than 6.8%in terms of share price appreciation.I have no problem with current shareholders who decide just to hold and wait for the stock to start moving again. In a year and a half, I anticipate BAC beginning a slow inexerable rise to the fifties and then the sixties and beyond. But not until this time frame. I wouldn't be buying new shares now when there are plenty of issues one can be investing in which will generte better than a 6.8% yield in terms of share price appreciation, in my opinion.Best and Good Luck all my foolish Friends who are long BAC. I hope I'm wrong, and can be jumping on the bandwagon mcuh sooner than expected.JimBNorman
Jason,I am one of those who believe that BAC will be up much higher five years from now. Therefore, I am buying. My last buy was at $40 and I am now accumulating cash in anticipation of buying more shares.Let's compare notes in a few years and we'll see if we were right about this company or not!BTW, are you currently serving the Army?
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