BofA doesn't sound so secure anymore - raising $10 billion - should we sell this stock?

MichaelShulman answered one month ago …

Fundamentally, Bank of America is a mess, as are potentially all of the banks. The problem is that we don't know the true value of the toxic sludge it holds on its balance sheets, so if you think it looks shaky now, just wait.

We won't know how truly terrible the situation is until the first Treasury auction to buy bad assets occurs. It may turn out that Bank of America's portfolio is solid, in which case it will be fine in the long run. Or it may, as I suspect, turn out that the bank has a lot of exposure to lethal loans that it's been able to hide up to this point.

Company fundamentals aside, the frozen credit markets, European bank failures, more U.S. bank seizures, uncertainty about a Fed interest rate cut and the election are going to make the financial sector a dangerous place to be for at least the next several quarters.