Bank of America to go under!

[Auslad]

Latest Chart OF BAC. It gave up most of the prior days gains and is turning down. The time frame for the complete collapse might be by the end of this month. When BAC goes, the whole system goes down not only in the US, but right around the world.

http://finviz.com/publish/081011/BACc1dl1757.png

 

[Market Sniper]

Just having a quick look through the thread and couldn't see any mention of the fact that Interactive Brokers use BAC in Sydney for Aussie deposits. What is the circumstance in regards to this IF BAC went down? For memory, i have read on another thread that your money is in trust, can someone confirm this?

Anyone with a comment on this?

 

[skc]

Anyone with a comment on this?

http://individuals.interactivebrokers.com/en/p.php?f=ibgStrength

 

[Market Sniper]

http://individuals.interactivebrokers.com/en/p.php?f=ibgStrength

Thanks for the link SKC.

Interesting comment within the page - "Futures, options on futures, and single stock futures are not covered, but available cash will be swept from your futures account to your securities account periodically to take advantage of SIPC and excess SIPC coverage to the greatest extent possible. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities."

 

[skc]

Thanks for the link SKC.

Interesting comment within the page - "Futures, options on futures, and single stock futures are not covered, but available cash will be swept from your futures account to your securities account periodically to take advantage of SIPC and excess SIPC coverage to the greatest extent possible. As with all securities firms, this coverage provides protection against failure of a broker-dealer, not against loss of market value of securities."

To me that means you still own your shares, but if the shares fell from $10 to $5 while the broker-dealer is broke and you have no access to sell the shares, that loss is not protected.

 

[Market Sniper]

To me that means you still own your shares, but if the shares fell from $10 to $5 while the broker-dealer is broke and you have no access to sell the shares, that loss is not protected.

Yes it does say "Your stocks, options, warrants, debt instruments, and cash -- denominated in all currencies -- are covered by this protection." But then says as stated below in regards to futures.
From what I make of that is it would be the broker of that future product if they went broke but then I dont understand how they say money would be swept from your futures account?

 

[Aussiejeff]

Don't worry. BofA is too big too fail. Fed can simply print whatever they need to stash in BofA's vaults. It's worked before (bottomless bailout), so why not now and forever more? Who cares about devaluing the currency or inflation? ATM I would have thought both of those things are seen by many as desirable for reducing the pain of debt?

 

[drsmith]

The share price of our own listed doughnut is looking a little puggy.

 

[drsmith]

BAC's share price is looking a bit sick.

 

[Aussiejeff]

BAC's share price is looking a bit sick.

The patient has recovered a bit overnight after a dose of "unexpected falls in jobless claims"

BAC UP almost +9% to US$7.35.

Not so sick today...raging fever has subsided for now, with just mild lingering symptoms of the pox.

 

[baby_swallow]

What a difference a Buffett make....
After the news that Berkshire injected $5 billion into BofA, all the indices
went ballistic during US pre-open last night.....but only to sell off during regular trading.
BofA rocketed 24% but gave off more than half of it later...

There's an ongoing rumour that Uncle Benny might announce QE3 tonight.
I suspect QE3 has already started. That $5 billion may be actually from the
Fed, using Buffett to inject confidence in the markets.
With Uncle Benny so desperate and running out of ammunition, anything can happen.

 

[pixel]

With Billions of $$ on the Buffett, any rumour of BAC's demise must appear greatly exaggerated.
How Greece must loathe not having a Buffett on board. Instead, she is weighed down by tycoons and heirs of tycoons who want to enjoy their Billions without sharing even a nano-cent with their compatriots. But then again - who would be willingly pay taxes in support of a lazy government when there are so many neighbours working their butts off to avoid becoming collateral damage...

 

[maffu]

This is why we look at fundamentals, and not charts, to tell if a company is going bankrupt or not.

JM.

There has been plenty of discussion on the fundamentals since this post.

Here a blogger write about the problems facing Bank of America: http://www.businessinsider.com/bank-of-americas-stock-collapse-2011-8

Bank of America replied to this blog post (they blame the blogger for their collapsing share price): http://www.businessinsider.com/bank-of-america-henry-blodget-2011-8

The blogger updated his stance post the Buffet deal:
http://www.businessinsider.com/the-truth-about-bank-of-america-2011-8
He explains how Buffet looks like the only one who will gain from the deal, while regular shareholders will be left in the cold.

Very interesting stuff.
Thanks for providing the technical charts, it led me to finding some interesting fundamental information about the bank.

Edit: If you are short of time I would recommend the 3rd article as the best one to read. It has quite a few nice arguments as to why the Bank of America balance sheet might be in a lot of danger, and why the 250billion of equity they have might not be enough.

 

[Tysonboss1]

That $5 billion may be actually from the
Fed, using Buffett to inject confidence in the markets.

Buffet is currently sitting on about $30B.

plus he just got back the $5B he put into Goldman sachs, No doubt he is just reinvesting this $5B he has been paid back by Goldman.

 

[maffu]

With Billions of $$ on the Buffett, any rumour of BAC's demise must appear greatly exaggerated.
How Greece must loathe not having a Buffett on board. Instead, she is weighed down by tycoons and heirs of tycoons who want to enjoy their Billions without sharing even a nano-cent with their compatriots. But then again - who would be willingly pay taxes in support of a lazy government when there are so many neighbours working their butts off to avoid becoming collateral damage...

Warren Buffet didn't buy common stock. His deal is not representative of the plight of the ordinary common share holder.

He bought preferred stock, which will pay him a nice 6% dividend. By holding preferred stock, he is also senior to common stock in the capital structure. So if Bank of America does have to take huge write-offs of inflated asset values in the future, Buffett and Berkshire won't get hit.

For his $5 billion, Buffett is also getting the right to buy a staggering 700 million Bank of America common shares at $7.14 a share--options that are already in the money. This represents 7% dilution to Bank of America's common stockholders.

In other words, Buffett is getting a preferred security paying 6% a year that is protected from dilution from future capital raises AND an option to buy 7% of the company--all for $5 billion.

 

[joea]

Warren Buffet didn't buy common stock. His deal is not representative of the plight of the ordinary common share holder.

Well you have to admit he knows how to swing a deal.
joea

 

[DB008]

Interesting article on the BoA

http://online.wsj.com/article/SB10001424052970204138204576600800330404330.html?mod=wsj_share_tweet

 

[odds-on]

Has anybody been following Bank of America over the Xmas period? There are plenty of articles on gurufocus and seekingalpha. After reading the numerous articles, i came to the conclusion that it is difficult to value Bank of America and reckon it is nigh on impossible for 99% of investors to value it. Therefore any position in Bank of America is a long term bet about whether the US government will let it fail. The strong aussie dollar and the potential upside could make it a very lucrative bet if willing to wait 5 years.

Thoughts?

 

[banco]

Well you have to admit he knows how to swing a deal.
joea

He seems to make some of his money these days by effectively renting out his reputation.

 

[chrislp]

The strong aussie dollar and the potential upside could make it a very lucrative bet if willing to wait 5 years.

Thoughts?

The stronger the Aussie dollar the less luctrative return you will receive if the stock price goes higher.

Besides it's in a long term downtrend. Not worth the bet IMO; better stocks out there.