Simply stated…wow!

In yesterday’s post I had said regarding the fact that Bank of America was going to have to raise massive amounts of new equity to improve its risk profile:

“It will be interesting to see what the financial market response is to this BAC news. If the financial markets are up then presumably the potential bad news of the stress test capital requirements is already baked into share prices. If the markets are down then they were not. And if they were not baked into the expectations of the market: watch out! It should be a day worth paying attention to the response.”

Well if you haven’t heard the financial markets in the U.S. rallied BIG time. The Dow Jones Industrial Average was up 1.21%, the S&P 500 was up 1.74%, and the NASDOG (couldn’t resist) was up 0.28%. The fact that these markets were up so much is a clear indication that the potential for negative stress test results had already been “baked into” most investors assessments of financial institutions’ values. In particular, Bank of America itself, the source of the “bad news” saw its shares rise a whopping 17.1%!!!!! Truly the stress test result was the last storm cloud hanging over BAC and apparently folks’ buy orders of BAC indicated that they feel the clouds are dissipating rapidly.

The rally has truly been impressive. I know for a fact that some of my loyal readers have taken advantage and have plunged into the stock market, many of you for the first time. I hope that your investments continue to appreciate in value and thanks for your trust in me!

Smiles!

Jason