Investing in Banking Sector Shares - Advice sought please

IBM01

Hi,

I have recently heard and read about the Banking Sector Shares all being at a very low price and that this may be the time to dip into the market as the only way is up for these shares.

I realise that there has been other threads about taking up the Bradford and Bingley Rights Issue, but in addition to taking up this offer I am thinking that now could be an opportunity to invest in this sector.

I am presently saving for a house deposit and obviously can't afford to make a poor decision, but equally I don't want to miss out on what could be considerable growth if the share prices start to get back to previous levels.

Am I reading this wrong or is this an opportunity?

Any comments/advice and preferred banking stock/those to avoid would be gratefully appreciated.

Thanks

Ian_W

IBM01 wrote: »

I am presently saving for a house deposit and obviously can't afford to make a poor decision, but equally I don't want to miss out on what could be considerable growth if the share prices start to get back to previous levels.
Am I reading this wrong or is this an opportunity?

If you're saving for a house deposit - do just that, SAVE!
Investment should generally be considered for the longer term. If you want a punt, fair enough it's your money but the gee gees offer good odds too and that's really what you're suggesting.
It may well be an opportunity, equally you may be trying to catch a falling knife!
I've no doubt that in a few years bank share prices will recover but no-one can say when that might be and they may have a fair bit further to fall yet.

napoleon

IBM01 wrote: »

Hi,

as the only way is up for these shares.





Thanks

That's what they were saying when Northern Rock shares went from £12 to £6. Then it they plummeted to £3 then a £1. You know the rest of the story.....:rolleyes: Similarly for B+B - from over £5 to below 50 pence

sarahblue_2

ALL shares are risky, and only ideal as for longer term investments.. though dividends might be better than other sectors..?

IBM01

Hello again,

Firstly many thanks for the replies and comments.

As I wrote my question I knew that the sensible option would probably be to keep saving my money and deposit it in a high interest account. Your replies have confirmed this.

That said does this mean that taking up the B&B Rights Issue is not a good idea either?

I don't mean to re-open the debate bearing in mind the number of discussion threads elsewhere, but I have never fully understood my options and had thought that by taking up the offer I was at least keping my investment at the same level it was prior to the Rights Issue.

From the sentiment above it seems that B&B share prices may fall further and therefore it would be best not to take up the offer. If so what option should I be considering please? :question:

Once again any comments/advice gratefully received.

Thanks

meester

sarahblue wrote: »

ALL shares are risky, and only ideal as for longer term investments.. though dividends might be better than other sectors..?

not when they are making losses.....

how much do you think our dividend is on Northern Rock?

TBeckett100

i wouldnt be expecting a quick gain from the financial sector. keep cash, its the only thing i can see growing at 5% over the next 12 months, save India and China.

Steve_xx

I think on balance that I wouldn't at this point take up the rights. At the minute they are slightly cheaper on the open market than the issue price so it's not wise to take up the rights.

With B&B I would tend to sit back and see how things recover. The news is that they are vulnerable to a takeover due to the share price being so low. But I can't see an approach coming just yet in the light of the botched rights issue and the mistrust of its board of directors.

All the banks are suffering at the moment and it could be some while yet before there are signs of recovery. On a positive note the banks are starting reduce mortgage rates slightly, indicating that they are finding it slightly easier to obtain funds. The bad news is that the mortgage market is collapsed and it is uncertain as to how much more sub-prime losses are yet to surface.

As a result of the Northern Rock debacle you can expect stronger regulation on the banking system. This might be costly for the banks if they are forced to retain higher levels of deposits in the future. That cost will have to be passed on somehow.

sabretoothtigger

That cost would be prudent and if anything the share price should be stronger for better regulation to prevent this happening again

If you are saving then it would be ideal to gradually accumulate bank stocks as they rise.
It could cost you as little as 1.50 in charges to buy shares automatically every money. It does need to be a long term thing though or it wont work in your favour
http://www.bankofscotlandhalifax.co.uk/sharedealing/products/bank_of_scotland_sharebuilder.asp

brightonman123

I think sarahblue was eferring to bank shares in general, EXCLUDING northern rock! (are they still trading these?)

meester

brightonman123 wrote: »

I think sarahblue was eferring to bank shares in general, EXCLUDING northern rock! (are they still trading these?)

The government kindly agreed to take on Northern Rock so that the whole country could pay for it.

They just announced a large loss, which we are ALL paying for.