Bank of America (BAC)

[Airelon]

Ok, the first thought is probably that I have to be insane for bringing up a financial right now, of all times, but follow me on this one.

I'm going to start some introductory buying with BAC in December, on the rally seasonal date (December 4th). Now I've had this listed in my portfolio for a while, but haven't nibbled on it again and my stock purchases are a bit of a 'process'. When I buy a stock, it's either under "Introductory Buy", "Accumulate", "Pair off", or "Distribute (Which is rare)". To make a long story longer, I'm buying for the first time in a long time, so I'm beginning at step one; "Introductory Buy". This means just nibbles, or under 1% of my account.

Ok. Why?

1) I'm a firm believer in a modified version of Dollar Based Investing / Accumulation. The financials are getting hit hard right now. Really hard. So it's a great time to look for great deals and values on stocks. But since I do not believe that the crisis is fully over, I'm not going to just jump in with both feet. Thus, the 'nibbles' from my account. It's sort of like real estate speculation. You start buying when you believe the cycle is coming to an end. Not exactly at the end, since bottom and top picking is exceedingly difficult. I then wait for the market to tell me when to put it into 'accumulation' status.

2) Bank of America has a great history on the dividend route. They've been paying regular, steady dividends since . . . oh, I don't know . . . 1903!! They've been rock steady through some of the worst times this country has seen; thus they qualify under the "established corporation" route. Their dividend growth rate is 13.44 %, which is way above inflation and far enough ahead of taxes.

3) Their P/E right now is 10. That's right. 10. Their debt situation right now isn't hot, but they've been fueling growth with that debt. Their EPS is 4.66 and their PEG is 1.56. I fully expect to see lower prices with BAC, but I wanted to jump in with a little more while prices are where they are. I like the price, and volatility has been through the roof lately in this stock market, so no telling where we're going in the future, and I'm not smart (or dumb) enough to try to predict where we are going.

4) At this time of year, my DRIP is turned on, so any dividends we do receive will be reinvested. If that's on falling prices? Great. If it's on rising prices? Even better, since the market would then be telling me to put the stock into an "accumulation" status.

5) 63% held by Institutions. This stock shouldn't be going away any time soon.

As soon as I get my fill on this one, I'll post it ...

P.S. - This purchase is not in the $500 Challenge Accounts that I run - just my normal portfolio.

[StockJunkie]

I like BAC even at $46, and loved it under $45. You can see last week how the stock received strong institutional support with three accumulation days.

Holding 6 months to a year out on BAC should yield a stock price back up in the $50s I would imagine. Either that or the subprime woes are going to get worse and the stock sees $30s.

You placing a stop loss on your position?

[Airelon]

Usually I'm a huge one for stop loss orders, but only on trades, not pure investments (Which I view as 5 year plus). I'm viewing this one as more of a small nibble on a long time investment, so there's no stop / loss order going in . . .

[Airelon]

Filled at $44.62

[Fredledingue]

BAC can be a nice buy on weakness, somewhere near $40.
Buying a little bit higher won't hurt if you are in for the long term.

I plan to buy BAC or MS. Still didn't make up my mind.

Target: $50 ~ 55

[Airelon]

Yeah, I think sometime in the next month or so, I might DCA my position on both BAC and MS (both for the ultra-long term), depending on the broad market here for the next few days. I'm waiting to see if we get a contra-seasonal move again.

[MacStir]

Bernanke statements spooked financials (he said) "some small regional banks invested in real estate will fail". This is an instance where the strong will get stronger (less competition) and the weak fail. Be careful with earnings estimates (more write downs ahead). A historical look (early 90's) is to buy financials below book.

[Airelon]

Will be buying more BAC in the future. Just not sure when. The most important aspect with BAC right now is not price. Just timing.

On the Bernake testimony.

Wow. I watched some of todays testimony on Bloomberg, as I was putting on an Orange Juice trade. Is it just me - or was he getting just hammered on some key fundamental data? I've never heard his voice waver so much.