Investment

Financial institutions will rebound

I’m no expert in the financial world, but there seems to be a raging whirlwind that is just sucking everything in sight and leaving devastation in its path. Yes, I’m speaking of the subprime loan disaster. Yet, with all of the loan companies and banks taking major hits, it’s a wonder that people want to even invest in banks.

But I’m here to tell you that plain ole’ logic dictates that banks, especially the larger ones such as Bank of America (BAC: 13.98 0.00%) and others will weather this storm just as they will others in the future. Why? Let’s just take a look at what happened right after the financial tornado touched down. Countrywide Financial Corporation (CFC: 0.00 N/A) sells itself off to Bank of America for $4 billion in an all-stock buyout.

Now what bank would be able to buy another company for $4 billion in stocks without even flinching after getting its wind knocked out? It would be a bank. Why? Because as long as society exists, there will be people out there that need to secure their finances and more often than not there will be people that need to borrow money. In that sense, there will always be someone there to lend them the money at an inflated percentage. Unless the apocalypse comes and the four horsemen are riding, I sincerely believe that financial institutions will exist and prosper. Thus, while many of their stocks might be lower than what you’re used to, they will rise again.

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The author expresses an opinion and is a shareholder of at least one of the corporations mentioned.
Photo Credit: (Franco Folini)

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