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Now is the time to sell NBG and invest in US securities

|Includes: BAC, C

In my opinion, under the present market environment National Bank of Greece is not worth considering as this company is under a real threat of becoming insolvent. The bank is loaded with toxic bonds issued by the Government of Greece that are rated one notch above default rating. The actual "value" of these bonds is approximately 20 billion euros, and it's becoming clear that at some point investors will have to take at least 50% "haircut". Debt to GDP ratio is about 150%. This is clearly not something that Greek government is capable of handling, it's just a matter of time before drastic and inevetible measures will be taken by so called "trojka" to bring the books of Europe's biggest troublemaker in order.. As suggested by S&P and other rating agencies, default is immenent, and 50% haircut is a conservative estimate. What does this mean to sharehoders? Well, the current sharehoders equity in the bank stands at around 9 billion euros. Anyone can do the math and realise that the insolvency of NBG is just a matter of time. The bank is the prime candidate for nationalization.
On the other hand, present market environment offers an excellent opportunity to buy stocks that may offer a huge potential return, one example is BAC. The bank is severely undervalued, and currently trades at approximately 0.6 of it's Tangible Book Value (same ratio as NBG!!!) Now, would you rather bet on NBG, or BAC? One bank if facing imminent insolvency, while the other has more than enough assets (pending sale of BAC's stake in China's bank is one good example) to offset possible losses on pending law suit from AIG. BAC is one of the biggest banks in the world, huge earnings machine that has over $2 trillion in assets! Without a doubt BAC will get back on it's feet once the mess Countrywide mortgages will be dealt with. Bank of America stands to benefit the most when housing market will finally turn around. s time It's shocking that NBG and BAC trade at very similar ratios! Those who missed the opportunity to buy cheap stocks in 2009 get another chance, and I urge my readers to use this golden opportunity. 

Disclosure: I am long BAC.