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BAC: A Long Term Truth

|Includes: Bank of America Corporation (BAC)

Hello community, and welcome to my first foray into the blogsphere.

I would like to begin with a short explanation on why I hold BAC stock. I initially purchased BAC stock in the 3rd quarter of 2011. Needless to say I missed the bottom albeit still got in at a very reasonable low. Comparatively my pick is not doing to bad for me at all. I have not held this stock a year yet and my return is over 20%. So onto the explanation of why I choose this stock.

1. It pays a dividend. Right now that dividend is $0.01/qtr. However pre financial crisis was $0.64/qtr albeit the very last qtr of 2008 which was $0.32.

So what did this tell. I can potentially get into a company that pays dividends for a price that is very attractive. Which brings me to my second point.

2. Large cap stock under $10. Okay way under $10. Something screams value when you can purchase a large cap stock which at one point was valued at $53/share. In my mind do I think BAC can reach this level again, maybe, but maybe not in my lifetime. Though if it recaptures just half of that I believe I'm sitting in great shape.

3. I absolutely despise the companies business practices. And I can hear the questions "why would you invest in a company you do not like?" Answer: You do not have to like something to make money on it. I have not liked the bank pre financial crisis. Interestingly enough my dislike for BAC has not put it out of business. It still earns money and returns it to investors. Large cap company with no signs of going out of business anytime soon. To put it into perspective look at people who do not smoke but own stocks in cigarette companies.

4. When I look at the potential lawsuits from the mortgage fiasco I still have to ask myself exactly how much liability is BAC on the hook for here, and can it recover. I am not a believer in BAC is 100% the evil empire people want to make it out to be. Any liability will be shared across the entire sector, and the government is not going to bankrupt the entire industry.

5. Basel III. This puts enormous amounts of liquidity in the bank. So much liquidity that the bank becomes over capitalized. This will lead to enormous profits if and when these regulations are relaxed.

And there you have it. My short foray into blogging and investing. While this is not the complete rationale it is the most pertinent. Any other reasons would be intangible and would draw massive criticism from hardcore investors. Plus I have to maintain some secrecy behind my overall investing strategy, It's still in the works being tested out. Come October of this year I'll post my whole portfolio for comment and dialogue. Thank you for reading.

Disclosure: I am long BAC.