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This article is part of our Rising Star Portfolios series.
Here's what I said back then:
"Despite the who-the-hell-knows-what's-going-on-inside-them factor and the foreclosure doomsday scenarios, Bank of America and JPMorgan's low valuations, their hefty coverage of bad loans, and the likelihood of stealthy government protection has me willing to roll the dice on both these banks."
Afterward I published my buy thesis, we saw shares run up 30% or so for each stock.
Great! But now they're both back down around where I bought them, with Bank of America down about 8% and JPMorgan up about 8%.
All things equal, I usually don't like to add more money into a position unless it's gone down 20%. But I'm making an exception today with Bank of America, because I was quite happy to get the original buy-in price, and not too much has changed.
There is definitely a lot of danger out there for banking in general and Bank of America in specific. Unlike its similarly beaten-down cohort Citigroup (NYSE: C ) , Bank of America still has a P/E ratio that isn't meaningful -- i.e., it's still losing money. And bad news about weakness in housing, talk of races to the bottom, allegations of shameful behavior, the robo-signing nightmare, etc., fill up my newsfeed.
But once again, I think the negative hype is overwrought at these prices. I'll take my shot now when Bank of America is selling for half of its book value. I will be picking up additional shares in my real-money portfolio Monday. And I'll continue looking in the banking space as others shun the industry. I'm seeing some good values in both large and small banks. We just have to be careful and pick our spots.
This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. Click here to see all of our Rising Star analysts (and their portfolios).