Are you new to shares but want to buy banks?

hopefulfooluk

The OP's post should be nominated for post of the year....

Couldn't have put it better myself.

omelette451

hopefulfooluk wrote: »

The OP's post should be nominated for post of the year....
Couldn't have put it better myself.

Ditto. I too 'called the bottom' a few months ago, but knew I was too inexperienced and stupid actually to be right (well, that and I couldn't afford to risk the money or even think long-term); not buying them was the best decision I've ever made. The shares may well be 10p now but the likelihood is they'll fall even further, and if you get anything back on nationalisation it will (or certainly should, according to market principles) be the price on the day the banks are taken over, i.e. most likely between 1p and 3p.

sabretoothtigger

b&b didnt give any chance of money back though?

seems the biggest threat is people thinking the price of the shares affects the running of the business and could see some of that tail wagging the dog effect.
Guess we'll find out soon enough

Lansdowne

One view to read ...
http://www.fool.co.uk/news/investing/2009/01/20/time-to-take-a-punt-on-a-bank.aspx

natashasprite

So do you think this also applies to taking out shares in other major companies at the moment since their stability is questionable?Should I sit it out before buying shares?Also where have people found the best place is online to buy shares?

tradetime

So do you think this also applies to taking out shares in other major companies at the moment since their stability is questionable?

Possibly, it rather depends on what you consider to be "major companies" and how much you know about their business / financial position.

Should I sit it out before buying shares?

Again, possibly, depends on your level of experience, or much work you are willing to do. I don't think any inexperienced investor will miss much by sitting on the sidelines for another 6 months.

cbobting

natashasprite wrote: »

So do you think this also applies to taking out shares in other major companies at the moment since their stability is questionable?Should I sit it out before buying shares?Also where have people found the best place is online to buy shares?

i would say so. pick a few you are interested in and a wild card or two and see what they do over the next few months.

I,_Brian

The opening post assumes that RBS et all will be nationalised - but at no point has the opening poster argued why the UK government would seek to quadruple the national debt by taking on RBS, and the economic suicide of doing so.

The reason banks are cheap is because investors are panicing as a herd - the current price of Barclays shares is ridiculous - now priced at less than 2008's profits.

The ability for a company to function does not depend on its share price, it merely reflects investor appetite for such shares. So long as the government is able to back RBS and Lloyds enough to keep them afloat, there's no danger.

Of course, only invest what you are prepared to lose, so no one should consider remortgaging to invest in banks.

tradetime

The ability for a company to function does not depend on its share price, it merely reflects investor appetite for such shares.

Strictly speaking I would say that is incorrect, especially for the banking industry, dramatic falls in share price will affect confidence, the net result is that depositors will withdraw funds, avoid the bank, and it also causes fear of counterparty risk, counterparties need to hedge their risk, in the current climate this is very expensive to do so the easy option is simply to avoid doing business with that bank, the subsequent net outflows of funds will likely lead to the banks collapse. The government may not want to nationalize , but the decision will most likely come down to nationalize or let it fail. (which is probably what should happen)

chopperharris

Blah99 wrote: »

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.

yes they are bargains , but they are also gambles like you mention later on.Anyone that cant afford to lose it shouldnt consider it.All shares are essentially gambles , and never put all your eggs in one basket , you are quiet right.

The Nationalisation of RBS is pretty much a worse case scenrio "promise" to assure the depositors that their money is safe.To prevent a run from happening again , like northern rock is the key here.

Any banking shares are traditionally , or historically , considered to be a safe investment.But there is always risk for reward , NR , BB , fanny mae et al.The reason why those failed is that they were primarrily mortgage based , ie the largest loans , and that their repayment of their interbank loans were dependant on the loan being repaid to them ....which we all know now wasnt happening.These toxic debts , were sold off to each other between banks , so everyone ended up exposed.

To value anything it must have a price , banks themselves are valued on three things , deposits , assets and debts.This balance affects the shares themselves , if the investor isnt seeing their return in divis or loses confidence they remove their investment.....and share price lowers.There is other factors like shorting to consider also , its no accident that the banking shares are taking a tanking the week it returns.

To value a bank like rbs take its 10 years last profit , factor in its current debt level , then you see the real value.Its not being reflected in real share price just now.Bear in mind though that there is other companies that are within the Rbs ownership not included in its share price , those it owns outwith banking itself that are not included in its income either.Which for me should be.....and rbs should not consider selling at their income levels from them. Link below to umbrella comanies. http://en.wikipedia.org/wiki/Royal_Bank_of_Scotland_Group

Now that the govt owns 70 percent of these shares , nationalisation would mean the loss of near 20 billion and more if the investors are compensated.The tax paid by rbs , its companies , its staff , depositors , mortgages , and loans well it must be a least the bears share of that every year.

Lastly.If the govt now owns 70 percent of the shares , then just how is only 30 percent being traded keeping the price so low?The only answer is shorting combined with day traders dipping in and out on small upwards.....thus keeping the price low.Lack of divis isnt helping fund managers buy large and long neither.

I reckon that march is the month for banking to start its recovery.Nr will have been balanced with its debt repaid to hmg...or at least the window for it.Rbs will post better than expected losses then than reported this week.

Then again all shares are a gamble , pure and simple.If you want my share tip for the next twelve months , get into glass big time....I hear the market is booming in crystal balls.

sorry for the long post people.