Bank of America Stock Trading

Bank of America Stock Trading
trade BOA stocks at Friedberg Direct

Trade Bank of America Stocks

Bank of America (often abbreviated BofA) is a U.S. based multinational investment bank with headquarters in Charlotte, North Carolina. It trades on the NYSE with the ticker symbol BAC. It is also one of the largest financial services companies in the U.S. through its Merrill Lynch subsidiary. Besides the headquarters in Charlotte, it also has a large presence in New York, London, and Hong Kong.

Bank of America is the second largest U.S. bank, behind JPMorgan Chase. It serves over 10% of all the U.S. bank deposits and competes directly in the consumer banking space with JPMorgan Chase, Wells Fargo, Citigroup, and others. The primary financial services of Bank of America are centred on investment banking, wealth management, and commercial banking.

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The Creation of Bank of America

Bank of America was originally founded in San Francisco and has grown over the years through acquisitions and mergers. In 1998, Bank of America was created through the acquisition of BankAmerica by NationsBank, with the resulting company taking the name Bank of America.

BankAmerica was acquired for $62 billion in 1998 by Charlotte-based NationsBank after suffering significant losses in the 1998 Russian bond default. At the time, it was the largest bank acquisition in history. It has continued to grow through a series of acquisitions in the 21st century, including the purchase of Merrill Lynch in 2008, which helped the bank establish its wealth management and investment banking businesses.

How Massive is Bank of America?

As of 2018, Bank of America (NYSE: BAC) is the third largest investment bank in the world behind Goldman Sachs and JPMorgan Chase. On the wealth management side of the business, it is the second largest in the world with $1.1 trillion in assets under management. Only UBS has more assets under management.

As a commercial bank, Bank of America operates in all 50 states in the U.S., the District of Columbia, and in over 40 other countries around the globe. It has a banking relationship with approximately 50 million consumers and small businesses, and over 4,600 banking centres.

On the downside, the massive scale of the bank, its business activities and economic impact have all led to numerous investigations and lawsuits in connection with the 2008 financial crisis.

Bank of America continues to enjoy a significant market share. As of January 2020, the bank has a market capitalization of $313.5 billion, making it the fourteenth largest public company in the world. Moreover, it is the eleventh largest U.S. corporation, and reached $23 billion in revenues in the third quarter of 2019. The BofA is expected to report fourth quarter financials on January 15, 2020.

Merger of NationsBank and BankAmerica

In 1997, what was then BankAmerica gave a loan of $1.4 billion to the hedge fund D.E. Shaw & Co. The loan was meant to finance the operations of various businesses on behalf of the bank. However, D.E. Shaw suffered massive losses in the 1998 Russian bond default, leaving BankAmerica on the brink of bankruptcy. NationsBank of Charlotte stepped in and purchased BankAmerica for $62 billion, in what was the largest bank acquisition to that point in history.

Even though NationsBank was the acquirer and the survivor, the merged company chose to use the name Bank of America, as it was better-known. The bank still operates under a charter that was given to Amadeo Pietro Giannini in 1927 just before he merged his then Bank of Italy with the Bank of America, Los Angeles creating the largest financial institution of the time.

Because NationsBank was the survivor, Bank of America is headquartered in Charlotte, and the stock history of Bank of America includes NationsBank stock price prior to the 1998 acquisition.

Bank of America Stocks Historical Prices

Shares of NationsBank were rallying off a December 1994 low at $10.84 a share and reached $44.21 by July 1998 but fell sharply as the merger with BankAmerica neared. By the time the merger was completed, the new Bank of America stock price was cut in half, hitting a low of $22 in October 1998. It wasn’t going to stay there, however.

After a rebound to the $38 level, creating a head and shoulders pattern, the stock fell in choppy trade over the next 18 months. By the time the selling was over, the shares were once again cut in half, trading at a low of $18.15 in December 2000.

Investors who bought the stocks at that price turned out to be very happy, so long as they exited before the 2008 financial crisis, which had Bank of America heavily involved as the largest mortgage lender in the U.S. after its acquisition of Countrywide Financial, and the largest underwriter of high-yield debt after its acquisition of Merrill Lynch.

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Bank of America Stocks Rally to All-Time High

From that December low Bank of America stock price shot higher, rising to $55.08 a share by November 2006. And that’s pretty much when investors should have started exiting. Share price held up for a couple months, and the losses were modest in the first half of 2007. As 2007 continued, the losses began to mount, and those who didn’t sell their stocks by early 2008 might still be sitting on their losses in January 2020.

The Financial Crisis and Bank of America Stocks

From the highs above $50 a share in 2007 to the middle of 2008, the company shares fell to the mid-$30s as the global financial crisis continued to deepen.

By the end of 2008, Bank of America stocks were down to $12.66 a share, but the worst was yet to come. By February 2009, the Bank of America stock price had fallen all the way to $2.53 a share.

The company looked ready to enter bankruptcy but was bailed out by the U.S. government as it was “too big to fail.”

Those smart enough to buy around those levels are quite happy in January 2020 as Bank of America stocks are trading for $34.76 a share. But those who had bought in 2007 and early 2008 are still sitting on their losses over a decade later.

Bank of America Trading Ideas

Bank of America is one stock where you won’t get much help from analysts. If you look at the 26 analysts following the stock, 13 rate it a buy and 10 rate it a hold. There is also 1 overweight rating, and 2 sell ratings. That doesn’t inspire a huge amount of confidence.

On the other hand, Bank of America did post record profits in 2019. What could be holding analysts back from recommending the stock, is the low global interest rates, which aren’t too conducive to the banks to make money, at least not from lending.

Those interested in fundamentals may want to keep an eye on the US economy, which has been signalling a coming recession, even though other data points show the economy to be in fine shape. A recession would almost certainly be bad for Bank of America and make it a candidate for a short sale.

Bank of America Breaking Out to the Upside

One interesting thing of note is that the Bank of America stock price has remained fairly range bound throughout most of 2018 and 2019. It’s only at the end of 2019 that shares were able to break above the $33 ceiling. That is a bullish sign as we head into 2020. The $30 handle is also the neckline from the head and shoulders pattern created in the late 1990s, making it a very long-term support.

Disclaimer: This is a general analysis and not to be viewed or construed as actual trading advice or a recommendation of any kind and just an example of how a particular instrument could, potentially, be traded.

In Conclusion

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Friedberg Direct BofA Stock Trading Information:

  • Bank of America Stock Symbol: #BOA
  • Trading Times: Monday – Friday 14:30 – 20:59 GMT
  • Country: USA
  • Currency: USD
  • Exchange: NYSE
  • Leverage:

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Disclaimer: Please note these are stock CFDs (Contracts for Difference)

When you enter into a CFD trade you don’t buy the actual stock itself but instead agree on a contract with the broker to settle the difference in value between the entry and exit price of the Stock based on the price the stock is trading at on the Exchange it is listed. That means when you trade Stocks CFDs with Friedberg Direct you get a flexibility that stock market rules often make very difficult or even impossible for some.