Quick now, what was the price of a barrel of oil in 1970? Was it $2, $12, or $22?

If you guessed $2, which seems ridiculously low in the face of yesterday’s new record of $53-a barrel oil, you’re right on. And where was it in 1980? Was it $20, $30, or $40?

If you picked $40, you’re right again. Needless to say, if you made an energy-related investment in the 1970s, you cleaned up. The agonizing problem, though, is that when something is too cheap and nobody loves it, it’s often time to buy it and most investors are fearful of doing just that.

One fella who did capitalize on the energy boom in the 1970s, so he once told me in recapping some of his major successes, was Larry Tisch, the late billionaire investor, real estate magnate, and CBS chief.

“Fear creates bargains and you make money by stepping in and becoming a ‘fear buyer’ when everybody is scared stiff,” he said.

Well, we’re seeing fear once again – this time in the financial stocks, which are trading at less than 16 times estimated current year’s earnings, making it the cheapest sector in the S&P 500. Why so? Mainly because of the fear surrounding rising short-term interest rates, which, it’s felt, may pressure profit margins and crimp loan demand.

Their sagging stock performances in recent months graphically illustrate the fear factor surrounding the financials. At the outset of March, financial stocks were up 7.4% for the year. But interest-rate jitters have wiped away much of the increase, with the group up just 0.8% as of the end of last month.

One prominent financial feeling the pain is Bank of America ($45.43), the nation’s third largest banking institution, which is trading at just 12 times this year’s estimated earnings, a 12% discount to its peer-group average.

Taking a leaf out of Mr. Tisch’s investment book, Richard Moroney, research chief of the Dow Theory Forecasts, a well-regarded 58-year-old investment newsletter out of Hammond, Ind., is urging subscribers not to let the fear of higher interest rates drive them away from selected financials, one of which is Bank of America.

“It’s a cheap stock with strong fundamentals,” he tells me.

Mr. Moroney argues that B of A has a lot going for it, most conspicuously of late its $47.3 billion acquisition last April of New England banking biggie FleetBoston Financial, which hiked its assets by more than 20% to $966 billion. Importantly, he notes, B of A is ahead of schedule in integrating Fleet and realized more than $200 million in cost reductions in the June quarter. What’s more, it’s well on its way toward the goal of $750 million in cost savings for 2004, which should expand to savings of $1.1 billion-$1.3 billion by the end of 2005, Mr. Moroney observes. Further, B of A is in the process of renaming Fleet’s 1,500 branches and converting them to its own model, which uses fewer full-time employees per branch.

Its latest quarterly performance shows B of A on a roll, turning in better than expected second period earnings on a 35% revenue gain. The quarter’s results also showed a 40% jump in net interest income to $7.8 billion and strong progress in deposit growth, investment banking income and consumer/small business lending.

Yet other B of A plusses cited by Mr. Moroney:

* A continued rising earnings trend, with consensus forecasts calling for $3.66 a share this year, up from $3.57 last year, and onto $4.02 next year.

* In anticipation of higher rates, B of A has repositioned its balance sheet, paring assets that are interest-rate sensitive.

* A moderate payout ratio, which suggests steady dividend growth in coming years. At present, the yield is a juicy 4.1%.

Three other financials favored by Mr. Moroney – stocks he thinks can each generate 20% to 25% gains over the next 12 months – are Golden West Financial ($113.49), MBNA ($25.53) and Manulife Financial ($44.35).

The bottom line: It may be Mr. Tisch’s strategy: There are times to be a “fear buyer.” Obviously, that’s Mr. Moroney’s strategy, as well, when it comes to selected financial stocks, especially B of A.