Beginner Investor - advice please

cashbackproblems

In this case with RBS you will honestly be safe it is over the worse, but you have missed the boat they were trading at 50p 18-24 months back, i was an idiot and sold for this price and put it all on PMK who have gone BUST so i have lost 1.5k! I made up for it on another share, but it was taught me not to invest in AIM and stick to ftse or what im doing at the moment and investing in funds, a lot less volatile as risk is spread.

Thrugelmir

gh05 wrote: »

I'm looking at putting around £2000 on RBS shares. Supposedly risky I know, but i've bee watching them fluctuate for around a year between 20p and 30p (or 200p and 300p since they were recently consolidated).

High was £3.75. Almost 12 months ago.

As an investor I would be asking myself why they are now languishing at £2.01.

Particularly for a business which should now be in recovery mode.

srcandas

Thrugelmir wrote: »

High was £3.75. Almost 12 months ago.

As an investor I would be asking myself why they are now languishing at £2.01.

Particularly for a business which should now be in recovery mode.

You may ask it and conclude the issues are already priced in the low share price and that this is worth a punt. Clearly OP is looking for a punt and not to build a long term portfolio. As long as he/she accepts the risks it may well work out better than the money being eaten by inflation in a bank.

I also feel the OP has good reasoning when thinking that HM are a risk limiting factor.

However looking for a 25% rise in RBS - well I wouldn't be holding my breath. They have many issues and are susceptible to the ups and downs of the banking sector. That said the brokers currently go with:

Strong Buy: 9
Buy: 4
Neutral: 11
Sell: 2
Strong Sell: 3

And finally (you can tell its sat morn. and I have nothing to do )

To say "Past performance has absolutely no bearing on future returns." is not IMO correct. It is not a guarantee of course but offers great insight. In this case past performance illustrates that RBS is a bank with bad systems, poor management, a mess of assets making it difficult for it to maintain a market focus. As each of these aspects has come to life the share price has reacted. In the light of no major update to it's systems, limited management changes, and slow progress sorting its asetts I would conclude that "I wouldn't touch it with the proverbial" :rotfl:

Sorry OP probably not too useful but good luck :beer:

MrMalkin

gh05 wrote: »

In answer to your question about why - Purely because this is what I've been following (someone Iknow has shares with them updates me) AND because they are partially government owned - it seems less likely that they will go bust.

They might not go bust, but then they might be fully nationalised - in which case the shareholders would be wiped out, as they were when Northern Rock was nationalised.

srcandas

MrMalkin wrote: »

They might not go bust, but then they might be fully nationalised - in which case the shareholders would be wiped out, as they were when Northern Rock was nationalised.

In a few years it might even be nationalised by the scots :rotfl:

Being serious I think that is a very good point :beer:

grey_gym_sock

cashbackproblems wrote: »

you have missed the boat they were trading at 50p 18-24 months back

isn't that before the 10-for-1 consolidation? i.e. 50p then is the equivalent of 500p today. so they have fallen (further) since then.

Thrugelmir

srcandas wrote: »

You may ask it and conclude the issues are already priced in the low share price and that this is worth a punt. Clearly OP is looking for a punt and not to build a long term portfolio. As long as he/she accepts the risks it may well work out better than the money being eaten by inflation in a bank.

At the very least you need to understand the fundamentals of a business even when taking a punt. Hester has shrunk the balance sheet from £2.2 trillion to £1.5 trillion by the end of 2011. Yet still not returned the bank to profit.

Ulster Bank's exposure to Irish property market could cost RBS dear, along with the threatened lawsuit in the US. So plenty of storm clouds gathering.

The shares may be worth a punt. More as a long term hold. Than a quick turnover one.

Mr_Terrific

gh05 wrote: »

It seems like at least an educated gamble.

It seems like quite the opposite to me, it's speculating on a company despite the bulk of evidence being against doing so. RBS have made massive losses for each of the last four years, they've got (as yet unknown) charges to take as a result of the interest rate swap mis-selling and LIBOR rigging scandals, and they've got large exposure to debt on the fringe of the Eurozone. And that's just for a kick off.

What's your reasoning behind thinking that the share price is going to go up 25% at any point in the short to medium term future, and that buying their shares in the hope that they do so is anything more than speculation?

gh05

jimjames wrote: »

Not sure where you are getting your numbers from. By my reckoning if they drop to 12p per share you'd have lost 95% of your money so would only have around £100 left not £800.

The consolidation was meant to make the price less volatile as they are no longer a penny share. Whether it works is another matter!

Maybe I am getting this all wrong, but how would I lose 95% of money if they dropped to 12p from 20p??

gh05

Mr_Terrific wrote: »

What's your reasoning behind thinking that the share price is going to go up 25% at any point in the short to medium term future, and that buying their shares in the hope that they do so is anything more than speculation?

Very simply - rbs shares are currently £200p, very recently they were £250p and for many many months it has been constant fluctuation up and down. Surely, where there is this fluctuation then there is a way to make money if you buy and sell at the right times. No denying from me that this is a punt - but when I can buy and sell when I choose then it doesn't seem quite so risky. The major risk seems to be what someone posted above - that the shares are 100% nationalised - but I could always sell prior to it looking like that will happen?

Tbh even a 10% increase and I could make profit at an investment of £2k with fees taken into account. Unless I am getting my numbers completely wrong - which I accept I may be? The 'lost 95% of money' at 12p has me concerned.