Earlier this month, I wrote about how I finally got around to opening my very own OptionsHouse IRA. What I didn’t tell you was that I took my initial $5,000 and invested it solely in one company. Bank of America (BOA) was down nearly 40% for the year, more than 60% from it’s 52-week high and every analyst had a “sell” recommendation. I guess the gambler in me said “buy” because the potential was big, along with the risk.
I haven’t owned the stock but for two weeks and already, there’s been big news story after big news story about BOA. First, they tanked a bit after others suggested they needed $200 billion in capital, then they rose a bit yesterday after that initial rumor was believed to be inaccurate. Also yesterday, there was chatter that JP Morgan Chase would absolve BOA with the help of the government but that appears to be inaccurate too. Wild swings up and down on more than 400,000,000 in traded shares everyday. This was certainly the stock for me!
But the big news on BOA occurred just a few minutes ago, as Warren Buffett announced he loved Bank of America stock, and decided to invest $5 billion (that must be fun) in preferred shares. Immediately following this announcement, the stock rose more than 25% and is currently up more than 20% with just a few minutes to go before the market opens. Apparently, Warren Buffett has the power to increase the price of any stock he chooses, by investing billions. At least initially.
Since I’m new to this game, I’m not sure how long this BOA surge will last, but I can see why day-trading is the most thrilling and dangerous profession there is. Investing just seems to be a more white collar form of gambling … so I better be careful. Trade on, America.
Published or updated August 25, 2011.