Hope You Sold Your Bank Of America Shares This Morning!

It appears that Wall Street has come to the conclusion that Berkshire Hathaway's (NYSE:BRK.B) $5 billion investment in Bank of America (NYSE: BAC) is not a sign that things are peachy at the bank, but rather a ploy to kick the can down the road. As I noted this morning, Buffett got a sweetheart deal. Why in the world would Bank of America dilute its shareholders and give Buffett the terms that it did, if the firm did not need capital as management has stated repeatedly. The whole thing smells of desperation.

Furthermore, if Buffett thought that BAC was such a terrific investment, why didn't he just buy the common stock when it broke below $7.00? The market initially reacted to Buffett's investment as if it would solve all of BAC's problems, sending the share price up as much as 25% in early trade. Now it appears that traders are having second thoughts, as BAC is up just 8%. This morning was an excellent exit point for underwater BAC shareholders. I hope you took it.