balabanovj

Big Debt and Big Returns Could Be Spurring This Rally

Debt/equity ratios are but one measure. In general, Alan is right, but in the case for example of Bank of America, we're all pretty sure how the story is going to end. It might take a few years, but BAC is going to extinguish it's TARP debt in the next 12-18 months as per it's CEO, and from there, at least if we are in the midst of an economic recovery, it's clear sailing and BAC will once again be an enormously profitable company- even moreso this time with it's ML investment arm which will add revenue through brokerage and IB, and Country Wide to take advantage of the real estate recovery. My prediction is that CW will eventially be spun off after BAC has milked the recovery out of them. BAC though, will return relatively quickly to EPS levels of at least $5-6/shr and a $50 share price.

JBB