Why I Sold My Shares Of Bank Of America
This is a sekingalpha.com article.
Interest rate sensitive assets, including BAC, have rallied hard since the FOMC statement came out for the October meeting.
But I have a very hard time believing the FOMC will actually raise rates this year given the data suggest that would be imprudent.
As a result, I’ve sold my BAC position and will buy back in when the price moves lower.
I do not believe the Fed will raise rates this year despite the market pricing it in.
At the beginning of October I wrote a piece on Bank of America (NYSE:BAC) that said the stock was at major long term support. That proved to be a good entry point as the stock has subsequently crested $17 in a big way, a huge move in a matter of a few weeks. I also wrote a different piece a few days later that posed the question of whether or not the Fed has ruined bank stocks. The thinking went that because the Fed has waited so long to raise rates, it is backed into a corner where the data suggest there is no reason to raise rates any longer. The Fed’s October statement has put a bid under the dollar and yields as market participants went from completely sure no rate hike would occur this year to nearly certain that it will. This has caused a shift in expectations for banks and in particular, the most rate sensitive of the big banks, Bank of America.
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