what are you investing in?

DoctorStrange

EdGasketTheSecond said:

Avoid banks, they won't be making any money with near zero interest rates and companies defaulting on loans. I'd rather go for supermarkets, telco's and gold/silver.

Banks know how to make money. The next step in this zero-interest rate environment is to start charging for banking services. We'll be offered a 'choice of something like £10 a month for a 'premium' account (which will be basically the 'free' banking we're used to + travel insurance + a pizza voucher or something!) or a 'basic' account (which will be 25p per Direct Debit, £1 per credit to the account, 50p to transfer money etc).

I think they're a good bet just now, if you're willing to wait at least 2 years for the payoff. At that point, you could be looking at between 30-50% profit on the shares, then maybe 5% a year when the dividends restart. It'll be a volatile ride until then so, if anyone is tempted to buy, I'd suggest doing so then shutting your eyes until 1.4.22!

EDIT
you're correct about the bad debt of course, but that's what the cancelled divs will cover. 

bowlhead99

DoctorStrange said:

Banks know how to make money. 

I think they're a good bet just now, if you're willing to wait at least 2 years for the payoff. At that point, you could be looking at between 30-50% profit on the shares, then maybe 5% a year when the dividends restart. It'll be a volatile ride until then so, if anyone is tempted to buy, I'd suggest doing so then shutting your eyes until 1.4.22!

EDIT
you're correct about the bad debt of course, but that's what the cancelled divs will cover. 

I've increased my holdings of some bank prefs LLPC and NWBD. Lloyds's announcement today can be read as only affecting the ordinaries which are a much bigger component of their capital. I am not sure if that's correct as I'm reading the announcement but if they want to pay a 2020 dividend on the ordinaries (albeit not until next year) they may need to have paid the prefs for the same period which is an approx 8% yield on current price.

Even if the div on LLPC  and  LLPD isn't paid for a year, the eventual return on purchase price would still be acceptable in a low-interest low-inflation environment even though well below the potential growth on a growth stock that rebounds from bombed-out prices. You would lose it all on a bail-in, so I am in two minds as to whether to just add more of the ordinaries for the much greater upside, but it could be a long time before it's proven that the banks can still do well with borrowers defaulting on loans at all time low rates, so buying ordinaries of Lloyds, Barclays or HSBC at recent lows does carry a lot of risk.

My BP Prefs have held up well - the FCA doesn't really have any power to blackmail oil companies into renaiging on planned dividends so they are masters of their own destiny. So probably worth keeping if you have them, but not particularly cheap to buy if you don't.

Thrugelmir

Be interesting to see if foreign investors now dump UK banking stocks with a domestic focus. Due to the lack of dividend. Wouldn't be surprised if the LLoyds share price goes close to 20p at some point. Which would make it an excellent long term recovery play. 

bowlhead99

Thrugelmir said:

Be interesting to see if foreign investors now dump UK banking stocks with a domestic focus. Due to the lack of dividend. Wouldn't be surprised if the LLoyds share price goes close to 20p at some point. Which would make it an excellent long term recovery play. 

It was, last time it went that low.

Thrugelmir

bowlhead99 said:

Thrugelmir said:

Be interesting to see if foreign investors now dump UK banking stocks with a domestic focus. Due to the lack of dividend. Wouldn't be surprised if the LLoyds share price goes close to 20p at some point. Which would make it an excellent long term recovery play. 

It was, last time it went that low.

This time Lloyds are not acquiring "The Worst Bank in the World" without undertaking any due diligence. A very different animal. With PPI provisions most likely conservatively overstated. 

colsten

This is my current portfolio. I have been advised to diversify a little more, due to the heavy focus on alcohol. Should I increase the Aloe Vera?  I have also heard a lot of negative reports about Tea Tree. Tempted to add some soap , but scared of the slippery slope. Suggestions please.

Alistair31

evajack said:

try to invest in stocks

Yes, which ones, though ?

bertpalmer

Tech funds for me

Aminatidi

Intending to build a larger stake in Personal Assets Trust which is currently 20% of my investments.

Possibly some more in Capital Gearing Trust and Mid Wynd depending on events.

Prism

I have added to Montanaro Better world to use up last years remaining ISA allowance. New SIPP additions are going into a private equity fund MERI. My first ISA allocation for 2020/2021 will likely go into an infrastructure investment trust