BAC

Some dividend investors still praised how great BAC (Bank of America) is. Their biases just cover their eyes.

For last five years starting from 2007, BAC has been falling from about $50 to about $8. The total dividends added will not offset the big loss. In Dec. 2007, BAC paid about 5% dividend at a price around $45. It should be loved by dividend investors back then.

Their argument is the total dividends from the IPO day and the depressed stock price could have doubled the return.

The argument has the following flaws.
1. It may not beat inflation. It should be adjusted for inflation.
2. If I bought Apple at its IPO, I could be thousands times richer than owning BAC. You just cannot draw a conclusion on a strategy from a specific stock but better from a group of stocks including Lehman Brothers.

When we evaluate a stock, we should skip some sectors like banking due to the quality of the mortgage that requires more expertise. Also, we should avoid our biases like loving blindly a strategy. Most strategies will fall eventually particularly when the strategy is over-used. Do you remember in buying internet stocks before 2000?

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The cause of 2007 recession.

This recession is caused by the mortgage derivatives. Most of us do not have the expertise in this area and we cannot blame ourselves for missing this recession.

The bankers boosted the bonuses by signing bad loans not according to the regulations. It does not only hurt the bank, but the entire sector, and the entire global economy. The government should step it and have regulations to prevent it from happening again.