Jim Sinegal: We ended 2014 with another disappointing quarter for the banks. I think a lot of investors were starting to look forward to an all-clear signal. They were hoping that expenses would finally go away, especially on the legal side. [They were] hoping that interest rates would go up, help out net interest margin. And we didn't really see either of those things happen, and the outlook doesn't look that great for 2015.
We also saw a very weak trading environment in the fourth quarter. So, on top of these other problems, banks did very poorly trading, didn't make a lot of money, and I think five or six years into the crisis, investors are really getting fed up and starting to throw in the towel.
The good news, if you're looking at investing in banks, is that prices have dropped a lot. We looked at banks as fairly valued through a lot of 2014. Now, they are starting to look cheap again.
We think Bank of America (BAC), especially, is poised for a pretty good year in 2015. It's trading just above tangible book value and at a discount to our $18 fair value estimate. Bank of America, with its heavy focus on the U.S. consumer, should be poised for success as the consumer comes back due to the economy improving and oil prices falling.