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Are you new to shares but want to buy banks?
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Blah99
Posts: 486 Forumite
If so, please just send me your cash instead. Every day I'll roll a dice, and if it's a 5 or 6 I'll add 1% to your pot of money. If it's less than 5, I get to keep 2% of your money. Sound like a good deal? No? Didn't think so.
There has been a whole flood of "I want to buy bank shares" posts in the last day or so, and most of them are from people who have never bought shares before. Let's be absolutely clear:
It doesn't matter if those shares are 50p, 10p, or 1p. They are not bargains.
Now watch as I imitate Derren Brown and answer your questions before you ask them:
Q. But 10p for RBS shares is unbelievably cheap! Why shouldn't I buy them?
A. Go ask a Northern Rock shareholder. There's two simple reasons. First, you'll be crying if they go to 1p, and your £1,000 of RBS shares will be worth £100. Second, if RBS gets fully nationalised, you get nothing. Simple.
Q. But I thought this through. If I buy them now for 40p and hold them for eleventy-million years, I'll make a massive profit when they go back to 400p.
A. Not if they get nationalised, you won't. You're gambling, plain and simple. Don't fool yourself otherwise.
Q. I'm not gambling!
A. Yes you are. You don't have a reason for buying these bank shares, other than historically they've been worth much more. You may as well go into a casino and put your money on black because historically black came up a few times earlier that night.
Q. Right, fine, you're saying "never buy any bank shares".
A. No I'm not. What I'm saying is, "don't try and catch a falling knife". Look back through these forums, or the Motley Fool/III/ADVFN forums etc to see all the people who called the bottom months ago, bought in, then made a massive loss. Wait until the shares start to recover, build up some resistance and the wider economic conditions improve. If you buy then, you're being smart. If you buy now you're being stupid.
Q. Hmm, what the hell do you know anyway?
A. Absolutely nothing. I'm a professional graffiti artist by trade. I just copy and paste articles from the FT to make myself look smart.
There has been a whole flood of "I want to buy bank shares" posts in the last day or so, and most of them are from people who have never bought shares before. Let's be absolutely clear:
It doesn't matter if those shares are 50p, 10p, or 1p. They are not bargains.
Now watch as I imitate Derren Brown and answer your questions before you ask them:
Q. But 10p for RBS shares is unbelievably cheap! Why shouldn't I buy them?
A. Go ask a Northern Rock shareholder. There's two simple reasons. First, you'll be crying if they go to 1p, and your £1,000 of RBS shares will be worth £100. Second, if RBS gets fully nationalised, you get nothing. Simple.
Q. But I thought this through. If I buy them now for 40p and hold them for eleventy-million years, I'll make a massive profit when they go back to 400p.
A. Not if they get nationalised, you won't. You're gambling, plain and simple. Don't fool yourself otherwise.
Q. I'm not gambling!
A. Yes you are. You don't have a reason for buying these bank shares, other than historically they've been worth much more. You may as well go into a casino and put your money on black because historically black came up a few times earlier that night.
Q. Right, fine, you're saying "never buy any bank shares".
A. No I'm not. What I'm saying is, "don't try and catch a falling knife". Look back through these forums, or the Motley Fool/III/ADVFN forums etc to see all the people who called the bottom months ago, bought in, then made a massive loss. Wait until the shares start to recover, build up some resistance and the wider economic conditions improve. If you buy then, you're being smart. If you buy now you're being stupid.
Q. Hmm, what the hell do you know anyway?
A. Absolutely nothing. I'm a professional graffiti artist by trade. I just copy and paste articles from the FT to make myself look smart.
Mmmm, credit crunch. Tasty.
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Comments
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never has the phrase "only invest what you can afford to lose" been so apposite. Its better to buy on the way up and miss the first 100% or 200% than try and pick the bottom - the bottom will last for eternity if they are natiionalised0
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Q. Hmm, what the hell do you know anyway?
A. Absolutely nothing. I'm a professional graffiti artist by trade. I just copy and paste articles from the FT to make myself look smart.
So the writings on the wall for us all then:cool: hard as nails on the internet . wimp in the real world :cool:0 -
Aw let them buy, every pound put in voluntarily is a pound less of my tax money that has to go in. :THope for the best.....Plan for the worst!
"Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown0 -
Why are the prices so low?
Share price usually relate to demand. The higher the demand for the shares, the higher the price goes. Same with vice versa. Take what you will from this. There is a reason why they are so low. No-one wants them.0 -
OP said "Second, if RBS gets fully nationalised, you get nothing. Simple."
Maybe not. You may be entited to compensation at a future date. If the market considers the shares to be worth x on the day they are nationalised, and the government decides for national economic reasons to take them into public ownership, it is arguable that they should pay compensation of x.
That compensation has been paid for nationalised assets, is a matter of record, though it can take many years ( just like if youir house was compulsorarily purchased for a runway) and if you check the advice from HMRC to Northern Rock shareholders this is cited as a future possibility.
Now no-one in their right mind would invest on the basis of compensation, but it may be inaccurate to state that the shares would give zero return on nationalisation, and the choice may not be between a potential profit and total wipeout, but rather a potential profit and unknown compensation. (They would also provide an immediate 18% return - that's 18%, not 118% - if you needed to offset a capital gain... but who has those anymore?)0 -
Took today from the LLOY ADVFN thread. Just shows how dangerous Bank investing can be...
johnpaul1 - 20 Jan'09 - 19:37 - 47423 of 47426
People posting up there losses. dont think this will be beaten. i had rbs at £2.40 av and sold when they collapsed to £1. however i switched into lloyds at £2.77 thinking i would be ok and am still here. thats 90% loss. thats £515k now = £51k. how wrong can you be. i have !!!!ed up my kids future big time and mine. life is still ok, but this income has now gone forever as i think bank will be nationalised. my problem with investing is i never cut a loss. i always hold on. well i wont be investing again after this. rather spend my income on enjoyment and today. i'm physically ill from the stress of the last 4mths, i've had a !!!!!! life, but this is the worst thing that has ever happened to me. i was an investor, today i am a mug.I learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear.0 -
Well US markets have just closed with a hammering on fairly decent volume Dow -4%, S&P -5%, Nas -5%, XLF the financial sector tracker lost 16% so tomorrow could be another rout this side of the pond in sympathy, unless some pretty spectacular earnings are released after the bell to lift the futures.Hope for the best.....Plan for the worst!
"Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown0 -
scrooge2008 wrote: »Took today from the LLOY ADVFN thread. Just shows how dangerous Bank investing can be...
johnpaul1 - 20 Jan'09 - 19:37 - 47423 of 47426
People posting up there losses. dont think this will be beaten. i had rbs at £2.40 av and sold when they collapsed to £1. however i switched into lloyds at £2.77 thinking i would be ok and am still here. thats 90% loss. thats £515k now = £51k. how wrong can you be. i have !!!!ed up my kids future big time and mine. life is still ok, but this income has now gone forever as i think bank will be nationalised. my problem with investing is i never cut a loss. i always hold on. well i wont be investing again after this. rather spend my income on enjoyment and today. i'm physically ill from the stress of the last 4mths, i've had a !!!!!! life, but this is the worst thing that has ever happened to me. i was an investor, today i am a mug.
OUCH :eek: and I thought I was sick.0 -
Thats why theres a saying - don't put all you eggs in one basket
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scrooge2008 wrote: »Took today from the LLOY ADVFN thread. Just shows how dangerous Bank investing can be...
johnpaul1 - 20 Jan'09 - 19:37 - 47423 of 47426
People posting up there losses. dont think this will be beaten. i had rbs at £2.40 av and sold when they collapsed to £1. however i switched into lloyds at £2.77 thinking i would be ok and am still here. thats 90% loss. thats £515k now = £51k. how wrong can you be. i have !!!!ed up my kids future big time and mine. life is still ok, but this income has now gone forever as i think bank will be nationalised. my problem with investing is i never cut a loss. i always hold on. well i wont be investing again after this. rather spend my income on enjoyment and today. i'm physically ill from the stress of the last 4mths, i've had a !!!!!! life, but this is the worst thing that has ever happened to me. i was an investor, today i am a mug.
Hey, It's not over till it's over. If Lloyds don't get nationalised then £3 is easily possible in a couple of years and so your back in business.
And why do you think you've ruined your kids future? Giving them silver spoons wont necessarily make them better people.
Hope it works out.:)0
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