Northern Rock Shares

bristolleedsfan

wiseman405 wrote: »

That is so true!!

well he isn't really into shares. But even he said to one of his staff that it would be a safe bet. The bank of england have put so much money in there, it just isn't going to go under. I don't really understand shares. If i put my money in, say £1000, and after a month they blocked anyone from putting money into the shares of the business. Would i loose my money?

Thanks
Tom

My advice would be to discuss it with your dad and either follow his advice or do the opposite of what he says, you will then have come to a decision either way.

rich.powell21

Hi all,

Long time reader of moneysavingexpert, but first time poster on one of the forums. This northern rock situation has got me intrigued. So much so that I decided to sign up to Hoodless Brennan and invest.

I am relatively new to shares, so I decided to invest only the small amount of £200 on my first go and now own 204 shares (bought at 0.97).

What are the chances that this would be a good investment if Virgin or Northern Rock succeed?

If northern rock was to succeed, then I would of thought that shares would slowly rise over a long term period (thus making the investment a good one).

If Virgin succeed, what will happen to my shares? Will the volume I own change?

As you can probably tell, I am a total newbie at this - so any help would greatly be appreciated.

Many Thanks,

Rich

LittleVoice

r.p - IIRC, the Virgin bid is likely to involve simply giving current NR shareholders the right to buy shares in the reorganised company. Their current shares would not really be worth anything in their own right but you would have an option to possibly benefit from the long-term rise in the price of the new shares if the Branson model works out.

PS: I have held NR shares since the conversion. I would not buy more now and am pleased I didn't take advantage of the dividend reinvestment plan offer they had a while ago.

sdooley

What you are all talking about with regard to Northern Rock is not investment, it is speculation.

Investment is based on the prospect of receiving an income. Speculation is gambling, whether in shares, on the price of gold or on horses.

Aegis

wiseman405 wrote: »

Hi there,
i am only sixteen and i know i cant put my money into shares.

But i could get my dad to put my money in for me. i am so tempted, i know there is a risk with anything like this. do you think there is a HUGE risk with these shares.
i have been watching them and its just so tempting at the moment!!!

Tom

Personally I think it's a terrible idea. There's no reason to believe that these shares are going to shoot up in value any time soon, so why would you throw money at them knowing how high a risk they are now? You would probably be less at risk investing in a BRIC/commodities/specialist fund than putting money into NRK right now. Quite frankly there is no telling at all what the share price will do, or whether it will ever get back to the original heights it was soaring at.

I think I'd rather keep my money under a mattress than invest in NRK right now.

rich.powell21

LittleVoice wrote: »

r.p - IIRC, the Virgin bid is likely to involve simply giving current NR shareholders the right to buy shares in the reorganised company. Their current shares would not really be worth anything in their own right but you would have an option to possibly benefit from the long-term rise in the price of the new shares if the Branson model works out.

PS: I have held NR shares since the conversion. I would not buy more now and am pleased I didn't take advantage of the dividend reinvestment plan offer they had a while ago.

Thanks Littlevoice

Aegis

wiseman405 wrote: »

well he isn't really into shares. But even he said to one of his staff that it would be a safe bet.

Without trying to sound offensive, if he's not really into shares, what on earth is he doing advising someone that it would be a safe bet? It really isn't! If you invest at, say, 90p and the government nationalises the company and pays out 20p per share as what they perceive is fair value for them, then you've lost 70p per share, or 78% of your investment with no opportunity to get that money back. If the company is taken over by Virgin and the share price is reduced to 30p with the new rights issue, you would lose a fair bit of your investment too, with no guarantee that the price would even match inflation for several years while the loans are paid off.

Yes, there's a chance that the bank will get back on its feet and the share price will recover, but personally the risk of the above happening more than outweighs any potential that I see for decent growth in the short to medium term, and I have better opportunities than a UK bank in the long term.

The bank of england have put so much money in there, it just isn't going to go under. I don't really understand shares. If i put my money in, say £1000, and after a month they blocked anyone from putting money into the shares of the business. Would i loose my money?

If trading is suspended, your shares are effectively worth whatever someone says they're worth until trading recommences. I would personally rather not be in that situation!

Browntrout_2

I think you can make a small fortune out of NRK shares!!

What you MUST do is start with a large one, then invest it wisely in NRK shares, and wait cos no-one else will have thought of this will they?, then wait some more, then a bit longer, (all the time with zero dividends) then finally hey presto there you have it a small fortune....

Aegis

Browntrout wrote: »

I think you can make a small fortune out of NRK shares!!

What you MUST do is start with a large one, then invest it wisely in NRK shares, and wait cos no-one else will have thought of this will they?, then wait some more, then a bit longer, (all the time with zero dividends) then finally hey presto there you have it a small fortune....

Ahh, a variation on the old joke:

"My wife made me what I am today"
"What are you?"
"A millionaire"
"Wow, that's impressive!"
"No kidding, I was a billionaire before I met her!"

Ahh, blatantly sexist humour...

Still, just for the ladies:

"How does a man show he's planning for the future?"
"He buys two cases of beer instead of one."

jamesd

wiseman405, you would be foolish to buy Northern Rock shares at present. The bank will survive but the normal penalty for failed companies is that the shareholders lose everything or almost everything. Bank survival with the shareholders losing all of their remaining money remains a real possibility. The government has made it very clear that it does not care if the shareholders lose money provided the savers don't. It's a game for big speculators only now.

If you want to take a significant risk, go with regular monthly purchases of other bank shares via ShareBuilder. Arrange it so that you will have the money to buy regularly for at least one year, because prices are quite likely to drop before they rise. Many of these are down 40% and are likely to recover in a few years.

Add some property and builder shares for more high risk investing if you want that.

Better still, look at an investment trust like RCP. That's the investment trust of the Rothschild family. Again, go with regular investing.

Or do some of each, since diversification is good. But everything except RCP is only for those who can stand losing a large part of their money because it is possible for another bank or a building company or two to do what Northern Rock has done.