On Seeking Alpha, there was an article that stated that the DOW bottomed out at July 31, 2008. It also stated that the financial stocks had bottomed out too. How can we find out if this is true? First, Bank of America has finally moved up. It was at a bottom of $20 but now currently trades at $30. One stock in particular that has unlimited potential but contains lots of risk is Washington Mutual (WM).
Washington Mutual is trading in the $5s to which a few months ago it traded as high as $50. In the past few days, there has been heavy institutional buying. I do not know what these guys know, but I’m for sure one to look more into this stock. If it hits $5, I will put some money down and take the risk. For such a cheap price, you could lose your cash but you could also hit a gem that will never see this price again. I do believe most of the subprime loans have already been factored into this stock. Even though there will continue to be more foreclosures and bankruptcies, I think the stock traders have already took this stock to the cleaners. The dividend has been cut which is good for the company so it can start raising money.
I personally use Washington Mutual for some of my bank transactions. It has been so far a smooth ride and I doubt it will be a bank to fail. There is a potential chance for a buy-out and it be nice to get part of that cash that flows into it.