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After the collapse of many banks last year including Lehman Brothers, it has been a tough year for bank stocks. However, in the past 3-4 months, things have begun to improve and overall bank stocks are moving back up and becoming good investments once again.

2009 Was Rough Year for Banks

It has been a rough year for banks in the stock market, and many investors have seen banks as risky investments for the last 12-18 months due to the hit many banks took during the height of the economic crisis. One year ago, Citi Bank was trading at less than 2$ a piece (C), while Bank of America was trading at only a few dollars (BAC). This drove the stock market down to the point it was reaching its lowest levels in over ten years. Many dropped their bank stocks because of the low prices, and many lost a lot of money in their investments.

That was the low point for bank stocks, and many were wondering if bank stocks were going to recover again any time soon. Well, they have recovered and they have recovered much faster than most economists and experts thought that they would. These days, bank stocks have increased by 146 percent in value on average, greatly improving the prospects of investing in bank stocks. In addition, the increase in bank stocks has helped bring the entire stock market up by 68 percent, thereby aiding many in their investments and helping people earn back the money they lost when the market nearly collapsed last year.

Banks were Safe Investments

The problem is that banks are often seen as safe investments and there are many investment portfolios in banks. When the bank stocks collapsed, there were many people wondering what they were going to do without this ‘safe’ investment. Many portfolios became worthless and experts wondered if you couldn’t invest in bank stocks, what could you invest in?

Are Banks Still Safe to Invest in?

That does not mean that bank stocks are great investments yet. There are still several problems that are keeping bank stocks down from where they were at their height a few years ago. One of the biggest reasons that bank stocks are not returning to their high levels is there is very low demand in loans right now due to the credit problems many faced in the wake of the foreclosure crisis. Many banks have downsized as well in order to save money. Are bank stocks a good investment? Well, considering how far they have come in a year since their collapse, the answer is a resounding yes. I personally have invested ~5,000USD in Citibank this weekend alone.

While bank stocks are beginning to recover and reaching higher levels, they are still down from their original levels from before the economic crisis. Some bank stocks are doing better than others, but there is still room for improvement. What is important is that bank stocks are going up, and that means they are good investments right now since they are nearly guaranteed to continue to move up as the months go on.

Further reading:

Which Companies Will Come Out Strong After Recession

Future Of Lending In America