Buy Bank of America and sell Southern Company?

[CountryBoy]

Hey folks,

I have a question and would like to hear what thoughts ya’ll may have on this question. We’ve got 15 stocks in our Roth’s IRAs, which is a nice manageable number for us. Our plan is basically to purchase stocks that have a history of steady dividends, with the idea of the divvies being used to supplement our retirement, although we do have a few, ie SLB and BHP, for just share growth, but overall we are pretty conservative in what we want from our Roth.

The question…. We currently have 3 utility stocks (DUK, SO, and GXP), which are hopefully recession proof, and are considering buying some Bank of America to add to our financial sector, currently we have WFC. To keep our stocks at 15, we are thinking about selling SO and then purchase BAC. We’ve batted this around between the 2 of us, but I thought maybe we could get a few more thoughts and data points on this. Any thoughts?

Thanks in advance guys.

CB

 

[offtrack]

I bought some more BAC for both my ROTH and my daughter's during the summer correction. I find them a cutthroat in business bank with an eye on profits that makes them worth owning as a stock. ( I would never bank with them given their fees )My daughter is 21 so i'm a bit more comfortable with her position since she has years to recover from any adjustments to price. I bought in the $49's and more around $47 and dumped some in the $50's and bought back around $48. Daughter and I hold 645 shares between us and will probably ride these out through price fluctuations. I may purchase more if stock hits $48-$47 depending on how economy looks. But realistically, I see potential for a drop to at least $40 or even somewhere in the mid $30's because of the tremendous run-up in the late '90's -2000's with the peak of $55 just a few short months ago. I am not particularly worried about this though because the flip side should be a stronger dollar and I'd trade a 25% loss for a 25% in the dollar. That is my negative outlook. On the positive side, with dividends I see possible 8-12% a year. And when the next bull market comes the financials should be right there. I'd wait on next earnings and see what they claim for bad debt. July-August has been a good time to buy and late fall-mid winter good to sell. On the dividend front you might look at the Canroys for dividend growth over the next couple of years. They have been in bad favor over Canadian tax threats but also have buyout potential. Lots of price fluctuation and decent dividend return even with Canadian government taking their piece.

 

[Bullitt]

Good move Offtrack. I think a company like BAC is essential in a long term investment vehicle. Reinvest dividends long term, and it's a better bet than tech down the road. As a long term investor ignore the short term noise and buy when the news is bad. My dividend vehicle happens to be C. Buy a large bank for the global economic expansion or buy a small regional bank in hopes of a buyout.

 

[CountryBoy]

I bought some more BAC for both my ROTH and my daughter's during the summer correction. I find them a cutthroat in business bank with an eye on profits that makes them worth owning as a stock. ( I would never bank with them given their fees )My daughter is 21 so i'm a bit more comfortable with her position since she has years to recover from any adjustments to price. I bought in the $49's and more around $47 and dumped some in the $50's and bought back around $48. Daughter and I hold 645 shares between us and will probably ride these out through price fluctuations. I may purchase more if stock hits $48-$47 depending on how economy looks. But realistically, I see potential for a drop to at least $40 or even somewhere in the mid $30's because of the tremendous run-up in the late '90's -2000's with the peak of $55 just a few short months ago. I am not particularly worried about this though because the flip side should be a stronger dollar and I'd trade a 25% loss for a 25% in the dollar. That is my negative outlook. On the positive side, with dividends I see possible 8-12% a year. And when the next bull market comes the financials should be right there. I'd wait on next earnings and see what they claim for bad debt. July-August has been a good time to buy and late fall-mid winter good to sell. On the dividend front you might look at the Canroys for dividend growth over the next couple of years. They have been in bad favor over Canadian tax threats but also have buyout potential. Lots of price fluctuation and decent dividend return even with Canadian government taking their piece.

Thanks for the response offtrack. With all that is going on with subprime, I believe I'll just continue to hold and see what happens. With the news of the past 2 days, it appears, we're not out of the woods yet, particularly in regards to subprime.

CB

 

[offtrack]

looks like that opportunity for buying BAC cheap is coming quick.