Analysts are wrong - Buy Bank of America in 2008

Out of interest's sake I have been collecting Standard & Poor's "Stock Reports" on several securities over the past four years. This has really emphasized the point that you should never buy stocks based on stock reports! Always, always, always, listen to price action. Bank of America (BAC) illustrates my point.


In the figures below I've taken snapshots of the "Buy", "Hold", or "Sell" recommendation that S&P issued for Bank of America stock in 2008, 2009, and 2011. Below that I've illustrated these recommendations on the price chart.

• Notice how wrong the buy recommendation was in 2008!
• And their 12-month price target of $45 was meaningless!
• If you had bought at $42.70, how much capital would you have left to buy again in 2011?
• I have never seen a Sell recommendation for this stock.

With the markets looking sick, pay attention to price action. Respect your trading rules. Don't let the sell-side sirens lure you into making bad decisions. Investing can be confusing, and confusion leads to losing money.

I had labored long and hard. I had done everything possible to avoid a mistake. I had researched, analyzed, compared. I had based my decision on the most trustworthy fundamental information. And yet, the only result was that I was wrecked - Nicolas Darvas

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