Paper 1 Essay Example | Topics and Well Written Essays - 500 words

Paper 1 - Essay Example The spreading of foreclosure has still not halted as the unemployment rates at 9 percent is the worst happenings US economy ever witnessed. The BOA stock dropped almost 29 percent in the last year is the worst performance in its history. In fact, BOA themselves admitted that they had undermined the mortgage crisis. They are trapped in the falling home price vortex for that leads to more defaults and then to claims from mortgage investors. After second quarter results got public declaring $8.8 billion losses, share price spurted by 28 cents. The phenomena can be explained by not the fundamentals of the company but by the technical analysis as stock market tends to move in opposite direction (contrary to the expectations of masses) for a short while; however a long term direction of the market follows fundamentals that is what happened with BOA also as the stock price is currently, as on 7/25, down at $10.01 having picked $10.23 on 7/21. The long term movement of the stock price of BOA will depend upon how the mortgage market takes turn in the coming months. (Historical prices, 2011) The BOA is not a safe buy now for there are no clear signs of economic recovery in general and housing market in particular. Moreover, unemployment rate is still hovering around 9 percent for the last several quarters. Housing market will improve only when unemployment rate improves and thereby the fortune of Bank of America. Wells Fargo came out with the results of second quarter showing net income of $3.9 billion that comes to 70 cents a share. The earning was up by 29% from 55 cents a share when compared with the figure of a year ago and that is in spite of â€Å"no remarkable change† in economy at macro level; however the revenue was down by 4.7%. That is indeed a good showing by Wells Fargo. Wells Fargos quality of home portfolio can be gauged by its