RBS advise for a novice

Hi
I used deal4free a few yrs ago and was very proud of myself in coming out level (honest!) after trading for about a yr. Wish i could say the same for my Aussie friend who i got into the bug.... he had the terrible misfortune of making big gains early on and ended trading UKX at £20 a point and ended up £10k down. Kept out of his way after that..

Ive now been drawn back to the market as i recall last time i traded just before the Gulf war when FTSE was @3200 and recalled with another friend how things have a way of repeating themselves, when the last (1st one in 1990) gulf war saw a surge after we went in. ( dont want to get political !) and the same happened in 2003

Now ... i cant help but think there is money to be had with banking shares and have bought shares in RBS ( not spreadbetting) as if they do survive there is no way they are going to stay at 15p,
However, the big question is,,, will they get nationalized and will i be walking round wearing a donkeys head for the foreseeable.
Ive also thought about hedging my bet by spreading my equity across several banks on the expectation that the ones that do survive will have good share price once this has all blown over,,,,,
Please , can somebody of experience given me the benefit of their advise.
:?:

Haven't read the post, just thought I'd nip in before some other like-minded t*sser does - my advice is that you spell the noun with a 'c' and the verb with an 's' BOOM thank you good night, much love.

That would not be hedging your bet...

You RBS shares have been diluted down to virutally nothing - so even if RBS goes back to what it was worth in 2006/07 then your shares will not go back up to the price they were then.

You are probably right - there's no way they will stay at 15p - however it will be because the bank decides to reduce the number of shares by re-issuing them at say 1 share for every 4 owned.

What you have done is an out and out gamble. If you are worried about losing your money - close the bet.

Maybe the banks will survive in private ownership - but only if the UK doesn't go bankrupt - something I'm not too confident of at the moment.

You're long at 15p, they are now 22p, thats 50% profit, why not sell half now and then you'll effectively be long the other half at 8p thus if they get nationalised you've got less risk, ok not so great upside but much less risk.

Or sell the lot for a 50% gain in a week, thank you and goodnight!

foredog said:

You're long at 15p, they are now 22p, thats 50% profit, why not sell half now and then you'll effectively be long the other half at 8p thus if they get nationalised you've got less risk, ok not so great upside but much less risk.

Or sell the lot for a 50% gain in a week, thank you and goodnight!

Click to expand...

i agree completely. Most people do not know when to cash in the profit. (a good example is the housing market, and people just sitting on paper profits, and expecting it to rise forever).

What if more losses are announced and bank shares take another beating, and rbs is completely nationalised. Your shares would be worthless then (i believe), remember what happened to Northern Rock and the fund managers tried to take the treasury to court over the share prices.

hmmm, you could take the view that the recent short selling frenzy on banking shares has caused a price discovery of circa 22p, however, a full nationalisation of the banking system cannot be ruled out. You'll get no dividends for years and it's not a position you can put on leave/ignore long term, you'll have to be constantly vigilant as to any movement. The process of selling into your profit to be left with half paid 8-9 pence for makes sense IMHO.

As an example of how a bank share can totally collapse then recover a very small amount to then fall back again harder take a look at Citi in the US; 52 week high of 29.73, collapsed to 3.77 late Nov 2008, then 'recovered' to 8.54 in Dec 2008, then fell to new lows last week of 2.90.
Sobering thought, the shares were nearly fifty dollars five years back.
C - Citigroup Inc. - Google Finance