All bank shares seem to be at 12 month lows. UBS, M/Lynch are really 'cheap'.
Before anybody says subprime, I know why the share prices are down, but could this be a time to buy?

 

like i tell my clients, very simplistic but, would you go shopping to buy your jumper the day before the sale or when the discounts are available?

 

Short term, you've already missed the boat. Longer term, it's getting to "reporting" season. There's bound to be a few rumbles along the way when the city gets its guesses wrong. Personally, I think I'd tend towards non-American banks.

J.

 

If you can afford to buy a bank, like most of us on scoobynet then best retire to your yacht and not take the risk

Sounds like a sound idea to me, but then I'm clueless about this stuff.

 

Maybe your clients are simple like me and don't understand what you mean.


Has the sale started or not?

 

Yes very true, AL, Lloyds, Barclays etc have all rebounded from their lows. Wish I'd had the courage then to buy.

 

I bought a bunch of UBS stock as a medium term investment. Reckon their total write down was very conservative and I expect to make a 20-30% capital gain within a year. Naturally if I'm expecting this much as a gain, the perceived risk involved isn't for the weak hearted.

Did you do any curry / carry trades in the end?

 

No as usual I talked the talk and then decided to have a beer instead

Thanks for your advice at the time though

 

Personally, I think there may be a 2nd bargain season once the banks start revealing the full extent of their muppetry. Citigroup could be good bet though it's frightening how much the SP has dropped in recent months.

J.

 

Wait for the 3rd 'adjustment' to the writedowns ... bad stuff (tm) comes in 3's ...

I'm still thinking resources are the way forward in 2008. Most of the predictions on profitability were based on $55 oil, and it's been way over that for most of 2007.

 

Steve when you say resources what exactly do you mean?

 

FTSE is suspected to bounce back this year to close around 7000 mark from various financial press sources, when that will start to pick up who knows, thing with the markets is they will go up and the oppourtunity will arise to sell out for a nice margin when the oppourtunity comes we dont know. I personally think with the markets its more about the timing than the stock.

Safe havens, times like this (sub prime) will be in commodities and the tobacco industry, traditional favorites. Mining sector seems to be the culprite for sustaining the markets while the retail and banking sector endured a tough time in the build up to Christmas and potentially short to medium term future

 

Oil, Gas, Gold, Copper, Zinc etc...

 

I would definitely wait-and-see on this one.... old Chinese proverb about catching falling knife etc(it is easier to pick it up off the floor).

Over the past five years or so the banks have been making all of their profits from mortgage-backed securities. For the stock price of these banks to improve this market has got to come back. Quite simply it is not going to come back.

Also for the banks to improve the economy needs to pick up. It's highly unlikely the economy is going to pick up over the next few years. Meaning more businesses/people are going to go bankrupt and there is one sector that takes it harder in the waste delivery pipe without any form of petroleum-based lubrication than anyone in a recession....banks

 

Another musing around this situation:

The sub prime problem was small in comparison to the wider financial system. Yet this relatively small issue caused the entire financial system to mess the bed in a spectacular fashion.

What worries me most about banks is if a serious financial problem hit such as a major recession war etc you're probably looking at an unprecedented collapse.

Buy Gold

 

I wouldn't.

 

Healthy profit this week

 

Falling knife is exactly my thought too.