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Bank of America Corporation Message Board

  • researchmadatory researchmadatory Mar 12, 2009 9:51 PM Flag

    One reason I bought BAC

    1. BAC will be $35 within five years. That is about 100% per year but we do not know when the major rise will start. Not a bad return for the patient.

    2. BAC has about $18 to $20 billion China investments. Over time these investments will likely outperform virtually all other country stocks.

    3. During this economic slowdown, Americans are, for the first time in decades saving more. Due to fear of the stock market, most of this savings is going into checking and savings accounts. Since BAC has accounts of one form or another with over 50 percent of Americans, the odds favor BAC deposits rising. This is good. The input feed that drives banks is deposits = money.

    4. Deposits are reaping about 1 to 2 percent in most accounts.

    5. Banks can borrow at just over 1 percent.

    6. Banks products are those that make about 400 percent profit (including all costs) on that 1 percent money by lending it out at 5 percent or better.

    7. New loans require 20 percent or more down payment on mortgates. This means that, combined with making about 400% profit on these new mortgages, BAC has a large cushion. Additionally, due to the demand for credit VS supply, BAC is lending to the "cream of the crop" = least risk borrowers. This applies to both business and consumers.

    8. BAC, previously a very conservative, low risk lender with focus on deposit money as source of funds has now moved more heavily into mortgages via CFC and investment banking via MER. BAC is implementing the same BAC conservative policies and procedures on these business units = higher margins, lower risk, huge potential as we move out of this recession. BAC could very well emerge as the most important financial institution in USA. One thing about BAC that GS does not have is its huge deposits business. In fact, it is so large, until last year, BAC had to limit its growth in deposits to adhere to the 10 percent rule.

    9. With 50 percent of Americans having an account with BAC it is highly unlikely politicians are going to come even close to nationalizing this bank. In fact, the politicians who want to be re-elected will do whatever it takes to support this company for this reason alone. 535 Senators and Congresspersons are the same.
    No chance BAC will be nationalized when over 50 percent of American voters have accounts with this company.

    Actually, Lehman Brothers, Bear Stearns and Washington Mutual were virtual unknowns to most Americans.

    Unlike those, BAC has a "presence" in in virtually every locality in USA and... "all politics is local".

    10. IMHO being a wise investor, it might be worthy of consideration to buy and hold this stock for the next five to ten years to see this emerge. One must consider all factors and I think the factor most important is survival. BAC is a survivor.

    There is one more little thing called mathematics.

    As time moves forward, the percentage of prime loans as a total of BAC /CFC loans rises at an exponential rate. The longer BAC makes a profit and the more loans it delivers with new, low cost, money, the greater the operating margins and... then... profit margins. This is good.

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    • Good enough for me.

    • BAC is a great company and Bernanke will assure they wil succeed.

    • Great Post!!

    • jie-lu@sbcglobal.net jie-lu Mar 13, 2009 2:20 PM Flag

      bump---

    • jie-lu@sbcglobal.net jie-lu Mar 13, 2009 1:53 PM Flag

      Deposites are the most important for a bank to survive. BAC has the largest deposite accounts while Americans are starting to save. BAC will be hit 90 in two years.

    • good post

    • ditto I bought

    • All good reasons to buy now.

    • Just a few little caveats...we're now dealing with a Socialist (borderline Communist) administration and Congress. The massive debt overhang is a HUGE burden on the overall economy, dollar, and future economic strength of the country.

      If things like the Messiah's global warming agenda, massive tax increases, corporate harrassment, etc, continue and are fully implemented, it will drive even more companies overseas further hurting the job market.

      HUGE tax increases and local, state, and federal DEBT are giant obstacles to any sort of sustained economic growth.

    • Well thought out and thank you.

      As with most financials though, I'm concerned about the Credit Default Swaps that may hemorrhage the financial world soon.

      Any thoughts on that?

      • 1 Reply to yoper7
      • 1. BAC will be $35 within five years. That is about 100% per year but we do not know when the major rise will start. Not a bad return for the patient.

        2. BAC has about $18 to $20 billion China investments. Over time these investments will likely outperform virtually all other country stocks.

        3. During this economic slowdown, Americans are, for the first time in decades saving more. Due to fear of the stock market, most of this savings is going into checking and savings accounts. Since BAC has accounts of one form or another with over 50 percent of Americans, the odds favor BAC deposits rising. This is good. The input feed that drives banks is deposits = money.

        4. Deposits are reaping about 1 to 2 percent in most accounts.

        5. Banks can borrow at just over 1 percent.

        6. Banks products are those that make about 400 percent profit (including all costs) on that 1 percent money by lending it out at 5 percent or better.

        7. New loans require 20 percent or more down payment on mortgates. This means that, combined with making about 400% profit on these new mortgages, BAC has a large cushion. Additionally, due to the demand for credit VS supply, BAC is lending to the "cream of the crop" = least risk borrowers. This applies to both business and consumers.

        8. BAC, previously a very conservative, low risk lender with focus on deposit money as source of funds has now moved more heavily into mortgages via CFC and investment banking via MER. BAC is implementing the same BAC conservative policies and procedures on these business units = higher margins, lower risk, huge potential as we move out of this recession. BAC could very well emerge as the most important financial institution in USA. One thing about BAC that GS does not have is its huge deposits business. In fact, it is so large, until last year, BAC had to limit its growth in deposits to adhere to the 10 percent rule.

        9. With 50 percent of Americans having an account with BAC it is highly unlikely politicians are going to come even close to nationalizing this bank. In fact, the politicians who want to be re-elected will do whatever it takes to support this company for this reason alone. 535 Senators and Congresspersons are the same.
        No chance BAC will be nationalized when over 50 percent of American voters have accounts with this company.
        Actually, Lehman Brothers, Bear Stearns and Washington Mutual were virtual unknowns to most Americans.
        Unlike those, BAC has a "presence" in in virtually every locality in USA and... "all politics is local".


        10. IMHO being a wise investor, it might be worthy of consideration to buy and hold this stock for the next five to ten years to see this emerge. One must consider all factors and I think the factor most important is survival. BAC is a survivor.

        11. BAC operations center in Makati in the Philippines has been its hub in fast growth Asia for about 30 years. BAC has more experience in Asia than virtually any other USA business entity. Its diverse business transactions and holdings in Asia and Latin America are sufficiently pristine that others can only hope to emulate that presence.

        12. Bank of America Corp. now ranks as the largest U.S. bank ranked by assets, according to a study by SNL Financial.
        "Charlotte, N.C.-based BofA had total assets of almost $2.5 trillion as of Dec. 31."

        As to credit default swaps and their impact on banks, that is one thing good about BAC as I understand it. Prior to this debacle and the feds convincing BAC to take over CFC and MER, Bank of America was very risk adverse and conservative in its dealings with these derivatives. As to how it will handle MER investments, IMHO BAC is unwinding the highly leaveraged, already written down much of it and, is decreasing risk by application of its own risk adverse policies and procedures overlaying CFC and MER old & policies.

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