With the number of bank stocks at historic lows, a lot of friends are wondering if it’s a good time to invest in the bank stocks such as Bank of America or even Washington Mutual. Well, I personally don’t claim to be an expert at timing the market and would not dare to put any money into any banking stocks at this point. I thought very hard at investing in bank stocks, especially some of the higher dividend paying ones about 3 months ago. I actually bought 10% of the money I set aside to invest in financial stocks into BAC at about 40.

Fast forward now and the stock is about $20. Can it get any lower? Who knows. I will not make the foolish mistake of trying to time the bottom for the banking stocks until I see the stock start seeing some strong upward movement.

Imagine if you thought WAMU or WB was cheap 2 months ago? Look at their stocks now. Can it go lower? Sure, not much as change for the better since 2 months ago. Be careful investing in banking stocks! If you really must invest in these stocks, dip your feet a little and buy 10% first. Wait till the stock drops another 20% and buy another 10%. If the stock goes up, invest another 10% of the amount you want to put into the banking stocks. Of course, if you are only investing a few thousand, using 10% would not be cost efficient.

Consider buying 20-25% at a time. For example, if you had $5,000 to invest, 20% would be $1,000. You don’t want to just jump in all the way.

Popularity: 39% [?]