October 1, 2014 | In: Financial
Bank Stocks Have Been Disappointing for the Past 7 Years
Back in 2011, when I used to be actively trading many bank stocks, large investors were generally excited about their prospects (their refers to the bank stocks) when the economy rebounds. Even Warren Buffett bought about 5 billions worth of shares in Bank of America. But, a few months after Buffett made that move, the stock tumbled to $5 (yes, five dollars), which means that Buffett, in late 2011, lost about 50% of his investment, or $2.5 billion.
Fast forward to 2014, and BAC is now trading at about $17, still below the $18.41 achieved back in April of 2010, and way below the pre 2008-2009 financial crisis level, when it was trading for about $50.
As for C, it is an even more depressing story. C, at $50, which is $5 before the reverse split, is merely trading at 10% of its pre-recession value.
S&P’s index, which both BAC and C are included in, is now 30% above its pre-recession value. The Dow Jones is now just below 20% above its pre-recession value. In other words, the major bank stocks, BAC and C, have underperformed probably every other stock in the two major indexes. Hardly the potential large investors promised and believed in back in 2010.
If you’re eying bank stocks for long term investment, then it’s possible that you haven’t missed the train for big returns. Just be very careful and do your due diligence before you taken any decision, and always invest with money that you don’t need.
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