Bank of America Corp (BAC): Don’t Let It Ruin Your Portfolio

Bank of America Corp (NYSE:BAC) can chalk up that pitiful performance primarily to its misdeeds and mis-moves committed during the housing boom — and the resulting payouts to government agencies to right said wrongs. How much longer will B of A have to keep up this sort of bottom-line-robbing activity? The fact is, no one knows, no matter what anyone says differently.

3. Return on equity
Return on equity, or ROE, measures the amount of net income a company makes with shareholder money and is another popular metric for measuring banks. B of A’s is 1.79%.

To put that into perspective, consider that JPMorgan’s ROE is 10.98%. Wells Fargo’s is 12.89%. Even Citi — another superbank atoning for its financial-crisis sins — can manage an ROE of 4.27%.

Gone forever are the days when the big banks could have ROEs in the 20% range (ah, the pre-crash era). But 1.79% means that B of A is hardly doing anything with your investing dollars.

Foolish bottom line
Bank of America Corp (NYSE:BAC) is trying to dig itself out of a very big hole, one largely of its own making. If you don’t fully understand the dynamics driving its business, stay away (one of the reasons I’m not invested). There are simply too many good banking investments out there to risk blowing up your portfolio with a black hole like Bank of America.

JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) are cases in point: Both bank relatively conservatively, but perform well for investors. Banks don’t have to be blind rolls of the dice, even ones with trillion-dollar balance sheets.

The article Don’t Let Bank of America Ruin Your Portfolio originally appeared on Fool.com.

Fool contributor John Grgurich owns share in Citigroup and JPMorgan Chase. Follow John’s dispatches from the bleeding heart of capitalism on Twitter @TMFGrgurich. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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