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Why B of A Beat the Market This Week

It was a good week for Bank of America (NYSE: BAC  ) . As of about midday today, the superbank's share price moved from $11.74 to $12.08, for a net gain of 3.03% -- allowing it to easily beat the market and its peers, except for Citigroup. Chalk this up to the president's State of the Union call for more home lending ... maybe.

The tale of the tickers
With about three hours left in the trading week, here's where some of America's biggest banks have shaken out so far:

  • Citigroup is up a hearty 3.31%.
  • JPMorgan Chase (NYSE: JPM  ) managed a net gain of 1.45%.
  • Take 1% off that JPMorgan number for Wells Fargo (NYSE: WFC  ) , who only managed a 0.45% net gain.

But even Wells Fargo beat the market this week, with the major indicators up by 0.37% at best:

  • That 0.37% belongs to the S&P 500.
  • The Dow Jones Industrial Average has barely managed to climb past the flat point, with a net gain of just 0.09%.
  • The Nasdaq ended up as man-in-the-middle, with a net gain of 0.26%.

With the market overall not doing anything worth writing home about, and no breaking B of A news, what's made for the superbank's happy week?

The homeowner's president
I'm going to echo my Foolish financials colleague Amanda Alix here and say that the continuing push for home mortgages may have something to do with B of A's 3.31% jump. She pointed out the President's call for more lending in his State of the Union address on Tuesday, and B of A's professed intention to get more into that game, which it so has far been woefully behind in.

In the fourth quarter of 2012, JPMorgan originated $51.2 billion in home mortgages. Wells Fargo, the country's largest home lender, originated $125 billion for Q4. In contrast, B of A only originated $75.1 billion for all of 2012. For B of A to start making real money again, that's going to have to change.

Any sign on the part of B of A management that it's willing to get beyond some understandable shyness of returning to home lending (after being burned so badly in the housing crash) must make investors happy, and perhaps more willing to plunk their hard-earned cash into a company still on the ropes from said burst housing bubble.

Of course, there's always the danger of losing sight of the forest for the trees. Of following one's stocks on a day-to-day basis, focusing on the inevitable spikes and falls, and losing focus on the long term -- which, in the end, is what Foolish investing is all about.

My favorite Foolish investing slogan is "Get rich slowly." Feel free to check in on your stocks on a daily basis, but put also be sure to put those three words on a Post-It in very plain sight, too.

Want to learn learn more about B of A, the most talked-about bank out there? Then be sure and check out our in-depth company report on the superbank, which details Bank of America's prospects along with three reasons to buy and three reasons to sell. Just click here to get access.

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Related Tickers

9/29/2016 9:36 AM
BAC $15.42 Up +0.04 +0.23%
Bank of America CAPS Rating: ****
JPM $66.72 Up +0.01 +0.01%
JPMorgan Chase CAPS Rating: ****
WFC $45.10 Down -0.21 -0.46%
Wells Fargo CAPS Rating: ****