would you consider buying banking (Citigroup, Bank of America) now?
Is is a good time now that the stock has dropped aprox 85% of its value from 1 year ago?
Thanks
Best Answer
731 points
thinker70 answered 9 months ago …
Depends on how nimble a trader you are and your risk tolerance. Personally I would not touch them with a 10 ft.pole!.
Just because they have dropped 85% and have received government bailout money does not mean that they are now HEALTHY companies that can show a profit and pay dividends. They still have a lot of toxic assets and the carnage in the housing industry may well mean MORE write downs as further mortgage resets from April on continue for at least another year.
Answers
2082 points
alanj answered 9 months ago …
No way. One main reason banks are in the condition they are in are those terrible ARM loans given to people who couldn't afford them. And most of them won't shake out until the end of 2010 or the middle of 2011.
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321 points
charlo answered 9 months ago …
as an investment: no way.
as a speculative play: sure why not?
if you have some "fun cash" to allocate, you could put some interesting plays in there.
given that this was asked 5 days, it's good you didn't get in. however, now it's just a question of whether the two banks are going to be nationalized or not. 50/50 on that one. put options are almost useless since they're too expensive already. you can play it out on your bet whether or not C will come out on top of BAC or vice versa. i.e. if you think C might come out on top, you can long C right now @ $2.00 for 200 shares and short BAC @ $3.60 for 100 shares and get a 10% net long exposure on C.
still...risky securities to play around with. but fun nonetheless.
