Is the Time to Invest in Banks approaching?

FraudBuster

Are they fake Nat West pigs?

http://reviews.ebay.co.uk/Fake-Natwest-Pigs_W0QQugidZ10000000001976777

sabretoothtigger

Probably covered in lead paint and toxic like their debts

I read all our banks have 120bn of bad debt. I know rbs has 2 trillion total but alot of that is good stuff I guess.
I wish the government had just seized the bad stuff, 120bn sounds small compared to juggling 2 trillion but hey what do I know

red_inkonly

I've also taken the same risk as DF. I purchased 7100 shares in Lloyds, paid 52 pence (....each!)

In a few weeks I'll be either rather happy or somewhat grumpy, both are preferable to kicking myself.

mrposhman

sabretoothtigger wrote: »

Probably covered in lead paint and toxic like their debts

I read all our banks have 120bn of bad debt. I know rbs has 2 trillion total but alot of that is good stuff I guess.
I wish the government had just seized the bad stuff, 120bn sounds small compared to juggling 2 trillion but hey what do I know

Yes that would have been a better plan but would mean brown admitting he was wrong and the yanks were right, even though he managed to convince them they were wrong and he was right.

How ironic that he's having to move back towards the policies put forward originally by the US treasury. Don't expect any apologies anytime soon from him though

tradetime

sdooley wrote: »

I don't know about Lehman, but people who bought bonds/PIBs from NR/B&B could have doubled their money or more if they bought when everyone else was selling. It's probably silly/speculative to buy any financial stock at the moment, but if you wanted to speculate on a bank not being nationalised, the safest way to do it would be by buying its listed debt, not its shares (and the higher up in the capital structure the safer).

Why do I say this? Because of a misunderstanding in a post above:



As an equity holder, nationalisation is not the only risk that could wipe you out. There is also a risk of a massively dillutive rights issue or a massively dillutive debt for equity swap, either of which could remove 90% to 99+% of your upside with no compensation (on nationalisation there could be some compensation). As a debt holder a debt for equity swap is also a risk but generally debt holders come out better from the process than equity holders - see Marconi - and the more senior you are in the structure the better.

Afraid I could write what I know about bonds on the back of a postage stamp, and still have some room left. I would imagine bank bonds are paying a pretty good yield currently, and as you say it puts you higher up the food chain, in the event of disaster. However I have seen the emergence of the "bond holders forced to take a haircut" phrase as government injects capital, so I'd imagine that risk exists here also. Other than that I don't know.

On the subject of buying banks, given I think even the strongest supporter of buying banks likely agrees upside potential in the near term is somewhat limited, one could possibly consider a strat of going long and selling front month covered calls.

StevieJ

Aegis wrote: »

And they're presumably low because people and institutions realise what a huge risk they currently represent to investors.

They are low because the major Funds are too scared to buy (even if they think they are a good buy), they will not take ANY chance on any stock that has even the remotest chance of being nationalized, this will change when the risk of nationalization melts away.

Decadent_Fool

red_inkonly wrote: »

In a few weeks I'll be either rather happy or somewhat grumpy, both are preferable to kicking myself.

Summed up beautifully! :beer:

gozomark

StevieJ wrote: »

They are low because the major Funds are too scared to buy (even if they think they are a good buy), they will not take ANY chance on any stock that has even the remotest chance of being nationalized, this will change when the risk of nationalization melts away.

there is alot in this - if a fund manager buys something and it goes down 99% thats part and parcel of the job, but if a company you hold goes bust there is alot more explaining to do - been there, done it, got the T shirt, and the T shirt said "don't do it again"

"you bought shares in something you knew could go bust and it did"
"yes, but the risk/reward profile made it worthwhile"
"but it went bust"
many hours then wasted putting together an explanation as to why shares had been bought

StevieJ

gozomark wrote: »

to me the key is - if you are right, don't sell too early - given there is a real possibility of losing the lot, I wouldn't sell unless it, at the very least, doubled, and would really look for much more than that given the inherent risk in the trade.

Tempting to cash in with a 50% profit from Friday :beer:

Trollfever

StevieJ wrote: »

Tempting to cash in with a 50% profit from Friday :beer:

You havn't got a profit until you have taken it.