Is the Time to Invest in Banks approaching?

gozomark

a low price is not necessarily the same as a cheap price...

SouthCoast

The price is set by the major players in the market:
BARCLAYS ORD 25P 50.00</SPAN> -9.20 (-15.54%)</SPAN> British Pence as of 03:00 PM GMT on 23/01/2009 (London Delay: 15 mins.) Previous Close Open Volume Day Low Day High 59.20 56.30 126,621,908 47.60 60.40 on 22/01/2009 on 08:00 AM on London on 02:18 PM on 08:08 AM

126 million @ 50p = £63 million traded so far today.

sabretoothtigger

More then double normal volume today, they release results in feb. If this market is just operating off pure fear then I guess it would rise when they release these so called good results they have mentioned.

Usually the market would price in its expectations though and companies are obliged to release profit warnings if expectations are wrong afaik
http://uk.finance.yahoo.com/q/ae?s=BARC.L

Analyst optimism for Barclays apparently rose this month, funny. They are reaching a previous recent low today, a possible turning point or not

StevieJ

sabretoothtigger wrote: »

More then double normal volume today, they release results in feb. If this market is just operating off pure fear then I guess it would rise when they release these so called good results they have mentioned.

Usually the market would price in its expectations though and companies are obliged to release profit warnings if expectations are wrong afaik
http://uk.finance.yahoo.com/q/ae?s=BARC.L

Analyst optimism for Barclays apparently rose this month, funny. They are reaching a previous recent low today, a possible turning point or not

They are heavily pricing in the bank being nationalised, I can't see the govt confiscating the Arabs dosh, in addition the Abu Jabi's must have had a look at the books - I may just buy these at 50p :beer:

sabretoothtigger

Day's Range:47.60 - 60.40
52wk Range:47.30 - 505.50

If its just a gamble then a stop loss would be a good idea I guess

tradetime

In reply to your points.....

brasso wrote: »

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.

Any replies I have made regards purchase of banking shares has been in response to threads such as this, punters who want to buy banks, so to say we are at the point where no-one wants to buy banks is a bit daft, there's practically a new thread every day, asking is it time to buy banks? As for "internet prophets" a prophet is someone who predicts the future, I have no specific knowledge what the future of any particular bank is, so I'm sorry to disappoint. Also I don't recall saying anything to the effect "Don't buy equities." That too would be a bit daft, since I have been buying

brasso wrote: »

As we all know, the spoils go to the contrarians, and anyone who buys the banks now, is a contrarian.

That on it's own is a naive and dangerous statement, there is significant difference in being a contrarian investor, and simply being contrary. If simply being contrary was the road to riches, then you could be off down the bookies with your wedge of cash and back all the rank outsiders, you will have achieved contrarian status, but I doubt your profitability will be much to aspire to. The point of being a contrarian investor is that you identify companies that represent good value, are cheap relative to their value and prospects, and are either being ignored or actively sold. Again if it was just about buying what everybody else is selling you would have boght NR, B&B, and Lehman, and you'd be rich now, no?

brasso wrote: »

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.

To some extent that could be said to be true, as already stated I am not staying away from the markets, that would be a little difficult, I simply choose to stay away from the financial sector currently.

brasso wrote: »

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.

I've further got nothing against gambling, I enjoy a game of poker from time to time. This is a "Savings and Investment" forum, one assumes that unless a poster here announces that he intends to "gamble" on banking stocks, that he is actually thinking of investing, indeed, I think the word invest actually appears in the title of this thread. It has no effect on my earnings if people want to gamble on whatever, knock yourself out, I genuinely wish you the best of luck.

brasso wrote: »

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.

Nobody participating on the stock market knows anything for sure, it's a game of risk over probability, I certainly don't recall claiming to know if any particular bank, past or present would be nationalized, but it is a risk factor. Further, I don't offer prophecy, as already stated I am far from a prophet, neither do I offer tips, simply opinion, mostly in the form of products people may want to consider, if they are trying to achieve something I am primarily a trader, "investment tips" from me would likely be a bad idea.

brasso

Fair points, expressed intelligently.

Fella

mrposhman wrote: »

Nobody care to explain why they have been coming on here stating nationalisation will occur??

Already did.

mrposhman wrote: »

not necessarily. Housing prices will fall a long way from here IF current credit conditions continue. If housing prices start to stabilise, more buyers will enter the market if they can gain credit.

Dreamland. House prices will fall a long way from here.

mrposhman

Fella wrote: »

Already did.




Dreamland. House prices will fall a long way from here.

I notice which part of my post you failed to quote, which was the main part where your point was flawed. I will explain in more detail below.

Whether or not house prices will fall further (and how much) is pretty much finger in the air stuff at the moment. If and when credit returns to the market, no-one knows what will happen with house prices.

As for your point that a fall in house prices will cause nationalisation, I will reiterate my position below.

The mortgage and NOT the house are the banks asset. Only when reposessions occur do houses become the banks asset. If they then sell they will then write down that capital asset.

As I said above, this is a NON-CASH ITEM and therefore will not effect the day to day running of the bank. They may have to reduce their profits but it will not affect cash. If a bank (business) has enough cash to continue to trade then what their profits are is irrelevant in terms of whether the bank continues to trade as a bank.

In fact, this recession (in terms of repossessions) is probably better for the banks than previous ones. Repossessions will still occur when people unfortunately lose their jobs, however, unlike in previous recessions interest rates are very low.

In previous ones where interest rates rise, a previously affordable mortgage then becomes unaffordable and they default which could result in a repossessions and therefore further capital writedowns. This is unlikely to occur in this recession.

You could also make the case that repossessions may actually benefit cashflow rather than hinder it (opposite for profit) as if Joe Bloggs defaults on his £1k mortgage and the bank repossess his house. He may have defaulted on his payments for 3 months and the bank may take a further 9 to sell the house. They sell for £150k instead of the £200k value of the mortgage.

They would have income and cash budgeted for the year of £12k, yet they've actually received cash of £150k therefore benefiting their cashflow but meaning that their profits are hit by £12k of operating profit and a further £50k of writedowns (exceptionals).

Therefore a fall in house prices is highly unlikely to cause the nationalisation of the banks.

Northern Rock was nationalised because there was a run on the banks and imo this is the only way there will be full nationalisation of RBS, LBG or Barclays. I'm not sure the government could justify themselves any other way. A run, seems unlikely thanks ironically to the collapse of Northern Rock and the banks in Iceland.

gozomark

mrposhman wrote: »

Whether or not house prices will fall further (and how much) is pretty much finger in the air stuff at the moment.
.

its difficult to see anything other than lower house prices for atleast a few months, just because house prices take a while to adjust downwards, unlike share prices. How much is definitely finger in the air now (and always)