Get to the Party Early

On Dec. 27, 2011, I penned a column for RealMoney readers titled Financials Lead the Way, in which I stated: "Financials will likely outperform the broader market in the year ahead because rarely has an industry been so hated and loathed over the past couple of years. That sentiment has led to a price-to-value distortion that exceeds any level of rationality. Specifically, both Bank of America (BAC) and Goldman Sachs (GS) offer the most attractive opportunities."

While I was completely comfortable with calling Bank of America my top pick for 2012, my opinion was clearly in the minority camp. Even noted value investors who I admire were harboring concerns about BofA. BofA's tangible book value was a murky calculation at best, so a low price-to-tangible-book ratio was not a signal to buy, the opposition claimed. No attention was given to the fact that Bank of America was trading for $60 billion with an earnings engine that had the ability to churn out $10 billion or more in annual profits. Instead, the focus was on the here and now, the short-term rearview mirror approach rather than looking out into the future....401 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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