Tuesday, August 04, 2009

Banks Continue to Truck!

On March 5th, a number of banks appeared to be headed for bankruptcy; what a difference a few months can make! Sure, you will find naysayers who continue to believe that we will soon see Armageddon, but banks shares have soared because their future is growing brighter day by day. The lowest price I paid (in friends accounts) for BAC shares was $6.16 but the shares fell all the way to $3.17. Today, these shares traded at $15.64. The brave sole who bought on March 5 has increased his investment 5 times and the economic recovery is just underway. The shares purchased at $6.16 are worth 2.53 times as much.

BB&T shares which traded at $13.32 less than 5 months ago, traded at $23.66 today. Wells Fargo shares has gone from $8.12 to $25.80, a "three bagger"!

As was noted several times in my postings on Facebook, the rally in bank shares and the rally in consumer cyclical shares tend to happen in close proximity of one another. Ford Motor actually bottomed about three weeks prior to the banks and has rallied concurrently. Ford has gone from $1.58, February, to $8.30 today. Wow! already a 5 bagger! Only a few people I know purchased Gannet Newspapers while it was in the $2 per share range but in 5 months, it has jumped to the $7 range.

Ford, Gannet and the banks have a long way to go before we can say that their businesses have fully recovered. The share prices will continue to lead the way. The share prices will peak long before profit peaks are reached, several years from now.

I encourage you to mix in a few "solid bets" along with shares of banks and consumer cyclical stocks. You should be sure to keep some Google shares in your accounts. Google is in the leader in the move from Internet 1.0 to Internet 2.0. The number of ways that you will ultimately use Internet 2.0 is unknown, but there will be many.