Bank shares - would you?

Conrad

Would you invest in Bank shares, and if so, which, Banks?
10 year strategy.

opinions4u

Conrad wrote: »

Would you invest in Bank shares, and if so, which, Banks?
10 year strategy.

I wouldn't!

The risk of total nationalisation still remains as more and more losses come to light.

If 1m people lose their jobs this year, what will the mortgage write-offs look like? On top of the losses to the business community that are already materialising.

The likelihood of even more rights issues have been reported in the money pages this week. If accurate, this would dilute your holdings further.

I'd give it 6 months and then review again. Apologies now if the share prices have edged up, but things still don't look good out there.

Longer term, where's the growth? Relaince on wholesale funding will become a thing of the past. This will slow any housing market recovery. The economy usually booms on the back of the housing market.

If you are going to go for it, HSBC would be considered lower risk. All the others are dogs.

free4440273

Short-selling of financials to be lifted next week: bring out the bodies :eek:

Conrad

Cheers opinions

I hear you, but I also have Warren Buffet nagging away in the back of mind, something about buying when no one else is, that the crowd tend to over shoot on the way up and under shoot on the way down, buy when there's blood on the streets and all that, erm, stuff.??

On balance I think your advice is sound

Masomnia

For me the threat of nationalization is too great. I do already have some bank shares, and I'm down around 55% and every time they fall a little lower I feel tempted to put more in, but I'm resisting.

I don't think any of the banks are worth investing in at the moment, unless you really can afford to to lose the money and have other sound investments, if such a thing exists at the moment.

RBS, HBOS, Lloyds TSB are all on the brink of nationalization. Barclay's may need more capital, and after snubbing the government would be lucky to get anything from them; so they're relying on the Saudis to give them more, and that last deal was not on particularly favourable terms, if I recall correctly. HSBC is going to have to cut its dividend I read today, and supposedly is not faring too well in the US, and may need a rights issue next year, which would dilute your holdings unless you throw more money at them.

None of them are looking appealing to me at the moment.

Dooooooooooooooonut

Look

Bank shares are cheap historically, yeah. Yes, they are probably even pessimistically priced.

BUT

They'll rise once banks start being a bit more sensible. In which case they aren't going to be growing spectacularly anyway... so why do I want a piece of that again? Consider the opportunity cost ladies and gentlemen!

So... would I rather stick a cucumber up my !!!!? No, I'd rather have bank shares. But they're hardly a screaming buy...

free4440273

free4440273 wrote: »

Short-selling of financials to be lifted next week: bring out the bodies :eek:

Dead Bodies I mean:D Mergers might give some impetus to share prices but lack of credit means lack of mergers...and a vicious circle in play. Nationalization (outright) means a complete lack of confidence and a possible collapse in share prices and 'balance' sheets.

Masomnia

If the banks are nationalized outright then the shareholders will presumably lose their entire holding. Just like with Northern Rock and Bradford and Bingley. Then it's crossing fingers and hoping for compensation.

I do think the potential gain is great, though. When the housing market bottoms out and demand for mortgages rises, unemployment falls again etc, the banks will do well, even if they are cautious. If the dividends are high again then your potential yield by buying in now is huge, not to mention that you could probably quadruple your money in a few years.

Still the threat of losing everything is too high for me.

justpaper

the op asked the Q. based on a 10yr strategy,

i wouldnt need to say in the position for 10 years,

HBOS is a nice buy at 60p, for the last 3months its been the low now the low is looking around the 65-69 mark, last price is 0.7010 based on the charts its the best time to buy,

lets just say i got £1000 / 0.7010 = 1426 shares, lets see how the next 2 months go

yes im crazy

Dooooooooooooooonut

My prediction: most likely at most the lifting of short selling will see a few gentlemen named nick and kev trying to front run the presumed shorters by going heavily short... then finding said expected shorters somewhat lacking.

I could be wrong of course, but I really doubt it will make a great deal of difference. No one with a brain, after all, is going to go short in any decent size when the ban could be reinstated at any time...

Oh, and most financials are not worth shorting too much

Oh, and it's not been terribly hard to go short anyway. I'm not sure how complex to go into here so here's a simple example: The FTSE 100 future is heavily traded and has decent liquidity (if one has a brain)... one can buy the main 10 non financials, short the future, and then be effectively short financials... and this has been entirely legit all the time

Trollfever

the op asked the Q. based on a 10yr strategy,

Have a look at the Lloyds TSB 10 year share price graph.