Brendan: Let's move on to financials. What do you think, 2013, what's your top stock?
Matt: I was trying to think through which is the one financial stock that I'm looking forward to in 2013. The problem is, and maybe this is a little home bias here, but I like so many of the banks, going forward. Even the big banks that a lot of people are going to stay away from, I'm going to look at that.
I look at Bank of America (NYSE:BAC), I look at Citigroup (NYSE:C), I look at JPMorgan (NYSE:JPM). I go outside of the banks into the insurance, to AIG (NYSE:AIG) like I was talking about, Berkshire Hathaway (NYSE:BRK-A), which is still technically an insurer. It's a giant conglomerate.
Getting back to the big banks, you've got really low valuations here, and you've got meaningful change coming to these banks. Bank of America has cleared up a lot of its legal risk. Just yesterday it filed suit against MBIA. It's got a big, ongoing headache with them and they're trying to sort that out.
That could mean billions in a hit against Bank of America, but they've absorbed these billion-dollar legal hits again and again, and they do have a big reserve against it, but they're getting through these legal problems.
They've got different leadership than they had before the crisis. I think Brian Moynihan is doing a great job there. You look at Citigroup; they've got new management. I think Michael Corbat has promise. He's only been there for a little while, hasn't shown a whole lot there yet, but I think he's got definite promise.
You look at these changes, you look at the valuation, I think they're pretty attractive.
Austin Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.