Bank Stock Bottom-Pickers Beware: There Are Easier Ways to Hunt Gains

by | Mar 15, 2023 | Market Analysis & Education, Trade Ideas

I’m sure most of you are at least aware of what’s happening with bank stocks out there. 

And I bet some of you are licking your chops thinking about buying some bank stock that’s fallen 60% and turning it around to make incredible gains in no time. 

Not so fast — let me explain why that’s not nearly as easy as you might think…

I was at a hedge fund and traded in 2008… you know, the Great Recession, when we saw a lot of things blow up in the markets. 

There’s a big difference I see between 2008 and now, as banks like Silicon Valley get shut down by regulators and industry giants like Credit Suisse Group AG (NYSE: CS) crater under $2 a share.

The big difference I see between now and 2008 is bank toxicity was worse then, and it was much more widespread. 

The contagion we’re seeing — which is now spreading to Europe — is mostly in banks that have the most risk on their books because they have the weakest quality deposits and other issues… 

So where does this contagion stop? 

Well, that’s tough to drill down and also complicated, so let’s limit discussion to one mega-cap bank stock, Bank of America Corp. (NYSE: BAC), to try and simplify it as much as possible… 

When Lehman collapsed in 2008, it was the fourth-largest investment bank in the U.S, and BAC was trading around $26 a share. 

BAC bottomed at $2.50 a share in 2009, and then the feds applied their super economic steroids. So after the big Lehman blowup happened, there was still a 91% downside pain train to come. 

For people who held and didn’t sell, it took until 2017 for it to get back to breakeven… nearly nine years!

But in the meantime, over that period, you could have bought Apple Inc. (Nasdaq: AAPL) and made 92%… Hell, you could have just bought the Nasdaq 100 ETF, the Invesco Trust Series 1 (Nasdaq: QQQ), and made 13%…

The point I’m making here, for you bank stock bottom-pickers out there, is there are easier ways to make a living than trying to pick bottoms and hope for a rebound. 

If you’re trying to pick a bottom for a bank stock… or two… or three… as always, manage risk and trade accordingly. Because these things could still have a long way down to go…

And a much, much longer time until they get back to breakeven.

I’ve been tweeting a lot more… charts, news reaction and general trading information, so be sure and give me a follow on Twitter @jeffzan. 

You can also join my free Telegram channel, where I share market insights in real time throughout the week, articles, videos and more!

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. 

P.S. Billions Are Flooding Into A Handful Of Stocks… 

The rest of this year may be filled with opportunities to potentially win big in the markets…

It also might be packed with plenty of ways to possibly lose. So what you need is an edge on the markets.

Something that isn’t widely known…

And works no matter what the market does for the rest of the year..

I just held a live broadcast to discuss exactly this.

During my presentation, I outlined a little-known daily market occurrence that regular investors can use to potentially boost their trading efforts.

It’s not a risky earnings move… not an insider buy…

It’s actually a bit of a “dirty secret” around the money-managing industry.

And it could very well be the edge that makes the difference in your trading this year.

>>>Go Here to Access the Full Presentation.

 

WRITTEN BY<br>Jeff Zananiri

WRITTEN BY
Jeff Zananiri

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