Is the Time to Invest in Banks approaching?

hedger

youd be better lumping all your money on red or black than buying bank shares. full nationalisation is on its way

StevieJ

hedger wrote: »

youd be better lumping all your money on red or black than buying bank shares. full nationalisation is on its way

No it isn't, but that is the way they are priced

StevieJ

tradetime wrote: »

It is probably approaching, like a freight train, the time to invest will be when there are no more threads like this, when all the get rich quick guys have been sucked dry, and you see threads entitled "Never invest again"
That's about time to invest in banks, why would anybody with any clue about investing want to invest in a sector that is being decimated? Fools and their money.
These "Ooooh is it time to buy banks yet " should be grouped together under a thread called "Anatomy of the pauper." Clearly Britain is high on money, high on gamblers, low on IQ.

I have just bookmarked this thread, should be interesting reading in a few months

Primrose

I bet it's the bankers who will be buying all the cheap shares, selling them when thye eventually increase in value and then create another crisis just this like one, so that they can sell them all high before they start crashing again.

hopefulfooluk

Primrose wrote: »

I bet it's the bankers who will be buying all the cheap shares, selling them when thye eventually increase in value and then create another crisis just this like one, so that they can sell them all high before they start crashing again.

Buying low and selling high is not what caused this crisis.

Reaper

I've been wondering about buying in for a while and was thinking of taking a high risk punt at Barclays. I thought their recent Middle East deal was rubbish but the share price had fallen so much it still looked good so I started doing some reading. It turns out that deal wasn't just rubbish - it was disasterous, thanks to the small print.

It turns out that if Barclays raises money from anybody before June then (at current prices) the Arabs share of the bank automatically rises to 55%. In other words if they take £1 from the government or issue a single £1 share they lose control of the bank. How do muppets like this get to be put in charge of a bank? :mad:

Primrose

Not only do these individuals get put in charge of banks, they also get given 'gongs' in the Honours List. Perhaps we should invite Barack Obama to come over here and institute a clear-out of those in public office.

sabretoothtigger

Barclays can last till june, the government will just have to wait till then to carry out their plan or barclays will have to pay in cash instead of shares

Since they arent paying a dividend they have 2bn not outgoing. If you read up on the latest save the world plan, the government has reversed its expectancy of tier 1 capital ratio for the banks so barclays in theory should have a few bn spare from this, this is my understanding from what ive read

brasso

tradetime wrote: »

It is probably approaching, like a freight train, the time to invest will be when there are no more threads like this, when all the get rich quick guys have been sucked dry, and you see threads entitled "Never invest again"
That's about time to invest in banks..............

But that's where we are now.

Your post, and the many dozens, if not hundreds, of other internet prophets I've been reading on the subject, are saying exactly that -- "Don't buy the banks! Don't buy any equities!". You've become so used to decrying the herd that you don't seem to realise that you have become one of the herd yourself.

As we all know, the spoils go to the contrarians, and anyone who buys the banks now, is a contrarian. The great majority of people who are staying away from the market at the moment, could be seen as showing the "herd instinct" that we like to blame on those who helped get us into this mess.

I've had a punt on RBS for that very reason. And yes, I appreciate that it is a punt and not a conventional investment. The gamble is whether RBS avoids nationalisation. If it does, then buying RBS at 10p or 12p is a gamble that will pay off, even if we have to wait a while. If it doesn't avoid nationalisation, then the gamble will fail.

So my decision rested on that question: will RBS be nationalised? I don't know for sure of course -- and neither do you or anyone else. I have to base my judgement on a number of factors, economic and political, and on balance, my belief, and obviously my hope, is that they won't be totally nationalised.

There is no shortage of stock market tipsters, frequently contradicting each other. Something I have learnt over the years is that you can find any opinion you want to find if you look around for long enough. Ultimately, all you can do is rely on your own intuition and research, and keep within a budget. That's what I've done.

I've decided to ignore the herd, and have bought quite a chunk of RBS at 11p.

Time will tell.

mrposhman

I'd like to see the main reasons why people think the banks will be nationalised. Theres been plenty of talk on here from many posters that state that nationalisation is inevitable but there would only be a handful from what I've seen who've actually stated a case.

The only one who has stated a case in this thread is sabretoothtiger. Whilst I agree with some of that case, the business model of lending is still profitable, in fact I think the gap between the interest rate the banks pay and that charged is probably growing therefore increasing the profitability on this.

Its quite alarming that people are immediately stating that the banking business model is flawed, theres actually nothing wrong with the business model, as this is shown with other banks like standard chartered, but the major problem has been the risk profiling.

Theres been statements about banks losing billions but to me these are from people that don't seem to understand what these losses mean. These are mainly NON-CASH items and therefore affect profits but not cash, which as most people are aware is king. The only way the banks will be nationalised is if they run out of cash, this is only likely if savers get all panicky and create a run on the bank as was the case with NR.

Banks and any businesses can run on whatever profits / losses they like, as long as they have cash they can continue to trade. Most people will expect banks to return to profitability in 2009, remember they will have limited tax obligations on their profits in 2009 too.

I personally cannot see the banks being fully nationalised for several reasons, some I have stated here others stated elsewhere.

People need to calm down a bit and think logically as to the actual fundamentals of the banks and come to their own conclusions. Their annual statements will bring alot of answers for most peoples questions when they are released at the end of February. Only then can people make conclusions, as at the moment people seem to be making claims of nationalisation without having any idea of what their free cashflows are.