Is the Time to Invest in Banks approaching?

BT

I’m relatively new to buying and selling shares so any help/comment on the following would be gratefully appreciated:

I see the bank shares have tumbled to pennies from the several pounds they were last year. I therefore think we may be approaching the time when we should consider buying them once again. My theory is that as with all shares, the bank shares will eventually go back up – may take ten years or more. Invest little in them now so that total loss won’t cripple you and wait for potentially huge gains in the future – far better than putting money in saving account over.

In order to try and workout which bank share to buy, I started looking into its financial figures. I know lots of sites tell you what the current share price is now and graph of the past, but where can I find the following info quickly and easily without going through lots of web sites and company results:

· Current value
· What the bank is forecasting as its profit or loss
· What the city is forecasting as its profit or loss
· How much debt it’s in
· How much the government has invested (loans, guarantees and capital), and therefore how much it now owns. I guess if it owns more than 50% then it’s in control and decides on whether to pay dividends or not.
· Any other info you think should be considered when trying to make this decision

Basically, what are the best free sites I can use to make an informed decision on which bank to invest in. And what’s everyone view on investing in Banks in the very near future.

anticlaus105

http://forums.moneysavingexpert.com/showthread.html?t=1431383

tradetime

That's all fine and dandy, but to save you a lot of time, what you need to know, is how much bad assets they have on their books, and since they don't even know that, it's an evolving situation, you'll be hard pushed.

mrposhman

the main issue with the banks - as has been stated above - is the banks toxis assets.

If the banks were savvy they would have an idea about what bad assets they already have and what provisions they may need to set for further reductions on drops in house prices / defaults.

Basically they should have overstated these when raising the capital they have raised recently.

If you think this will cover it then they should be ok. At the end of the day, a bank will only be nationalised if they cannot function any longer due to a lack of cash. As it stands this isn't the case and shouldn't be if people don't create a run on them out of fear. Remember, NR was only nationalised due to a run on the bank.

Banks are just the same as any other business, profits mean nothing, cash means everything, in terms of whether they will survive. In my opinion, the banks have no problem here.

Any further writedowns are technically non-cash and therefore have a P&L and not a cash affect. They may well use their assets to secure loans and the best rates they can get which will have a major affect should they have further writedowns.

I think the banks will stay volatile until their accounts are released at the end of Feb. They all happen in the same week or so and will most likely follow the stimulus package in the states and possibly will cause a big change in their share price depending on what they show.

As for the information you request, some is easily available, some not so much. I use www.digitallook.com for brokers forecasts and some valuations.

cwcw

I'd be interested to know what would happen if nationalisation happened? People seem to be saying that if it happens, shares will be worthless. But I thought the government had to buy up the shares to nationalise, so they must pay the market rate?? Forget any premiums - I don't think many people buying RBS shares right now are concerned about that - this is all speculation that the price will bounce back after getting so low.

sabretoothtigger

The capital reserves of the banks have been exceeded so they are in practise insolvent on a private basis but government help means they continue to stay afloat.

What the worth of them is whether they'll ever exist without government help again, apparently the market thinks RBS could only ever be wound down now. Any profits will only pay the interest on what they owe to others I guess.

Like if you borrowed too much on credit cards and then suffered a job loss. At some point you can only pay the interest and theres no chance to get back to zero again.
I think the banks are like this, they over borrowed and now they have no chance to repay because their income came from the housing boom and other declining industry

What you have to judge then is if the same is true of all banks and its just a case of time and truth to know the real trouble they are all in
Like my favourite bank in the ftse sector would be standard chartered, I dont really know much about them but most of their profits are from asia which has stronger fundamentals then europe and is not in long term decline by my estimation.

With a low price I would assume this is the correct price for this company, forget bounces. The skill would be in good judgement and estimation of the future prospects and fundamentals

I'd be interested to know what would happen if nationalisation happened?

Assume you get nothing back and you wont be far wrong afaik. These banks exist on the whim of politicians, whens the next election?

Fella

Forget what these companies used to be.

Forget what their shareprice used to be.

Imagine if someone came along & offered you the chance to invest in a brand new company with this description:

"It's losing billions & billions of pounds. It has a totally unknown level of bad debt. The Government already owns a chunk of it & can dictate how it runs it's business."

Why on earth would you want to invest in such a company at any price?

cwcw

Fella wrote: »

Forget what these companies used to be.

Forget what their shareprice used to be.

Imagine if someone came along & offered you the chance to invest in a brand new company with this description:

"It's losing billions & billions of pounds. It has a totally unknown level of bad debt. The Government already owns a chunk of it & can dictate how it runs it's business."

Why on earth would you want to invest in such a company at any price?

Because it's hard to imagine it can get much worse. I think we have hit the bottom. I think the world economy will start to pick up from now on. Sentiment in America due to the new president may trigger it. If I had the balls, I would stick £1,000 in each of the big 3 UK banks, and I think I'd be into profit within a few years even if 1 of them does go bust.

cwcw

Dooooooooooooooonut wrote: »

I think you're on crack mate!

There are so many easier ways of making money...

Like selling it instead of smoking it?

hopefulfooluk

Dooooooooooooooonut wrote: »

There are so many easier ways of making money...

Like working in a sweat shop

cwcw

I will make a pledge here and now, based purely on my own personal hunch: RBS, Lloyds, and Barclays will all still be trading as private companies in 6 months time. All of them will have share prices at least 10% higher than their levels as of today.

I will quote myself in 6 months ish time on this. :beer: