Bank of America Corp (BAC) is the nation’s second largest bank by assets after JP Morgan Chase & Co. (JPM). BAC’s current franchise started as the old North Carolina National Bank which bought Bank of America in 1998, and retained the purchased bank’s name. Over the years, the new Bank of America bought FleetBoston Financial in 2004, credit card issuer MBNA in 2006, and then purchased mortgage company Countrywide Financial in 2008, and Merrill Lynch brokerage in 2009.

BAC stock was trading recently at a little over $6 per share. Its 52 week range is from $15.31 to $4.92, and its market capitalization is $62.1 billion. It pays a penny per quarter in dividends, for an annual yield of 0.7%. It has no P/E due to net losses.

The first week of January, 2012, gives us a great idea of the psychology underlying BAC’s stock price. On January 5^th, a rumor arose that the federal government is planning another mortgage assistance plan. On that same day, BOA stock rose 9% on the news. The White House, however, has repeatedly denied that rumor. Wall Street wants so much to believe in BAC, that it will grasp at non existent straws to bid up its stock price. Instead let’s deal with reality.

BAC stock sunk almost 60% during 2011. It does not know yet the true scope of its Countrywide debacle. It has shown no ability to obtain ongoing profitability. It has managed to enrage its actual and potential retail customers. Let’s look at these issues step by step.To continue reading, click here.