Bank Share Purchasing in the Current Market

[wonderboom]

Hi All,

I was looking to garner some opinion on purchasing shares in the banking industry in the current climate, looking at the current price on HBOS shares 172 comared to 9 months ago at 900ish, do people think this sector will recover to these levels again and if so what sort of investment term would this lead to to gain decent return on your investment?

I don't post here much and am in no way and "experienced" trader or anything of the such, just an interested amateur.

Cheers.

WB

 

[Hoggums]

Hi All,

I was looking to garner some opinion on purchasing shares in the banking industry in the current climate, looking at the current price on HBOS shares 172 comared to 9 months ago at 900ish, do people think this sector will recover to these levels again and if so what sort of investment term would this lead to to gain decent return on your investment?

I don't post here much and am in no way and "experienced" trader or anything of the such, just an interested amateur.

Cheers.

WB

In real terms I don't think bank shares will ever be worth as much again. Same with houses.

An new era of banking is unfolding, cautious and safe, so inflated profits and dubious asset valuations are a thing of the past - which means lower share prices and lower divis.

 

[Gumping]

In real terms I don't think bank shares will ever be worth as much again. Same with houses.

An new era of banking is unfolding, cautious and safe, so inflated profits and dubious asset valuations are a thing of the past - which means lower share prices and lower divis.

............ Fear and Greed have been eradicated from the system.........?

 

[wonderboom]

Hi,

Thanks for the replies so far!

I think it will be interesting to watch as the markets recover from this global downturn in the banking realm, to see what happens with the share prices, lots of profits could be made if the price returns to Nov 07 levels from the current market level for banks shares.

In a way I agree with Hoggums, but on the other hand, won't the greed monster return along with market stability as I think Gumping is refering too?

Maybe I'm wrong, only time will tell?

Cheers,

WB

 

[stevexyg]

On the bbc news this evening a correspondant said HBOS had huge reserves dedicated to supporting the business in a tight credit market. They themselves have said they are the best placed UK bank in this crisis. So I personally believe the share price decline represents an over-reaction and see a recovery to perhaps 1/3rd of nov prices in short term and atleast 50% over next year. Anyone agree?

 

[Hoggums]

Almost certainly greed will appear again at some point and another bubble will develop - it's human nature. However I think it will take some time for the dust to settle from this one, once todays generation of bankers have retired no doubt the new generation, still wet behind the ears, with no experience of major downturns will find the next "big" thing to invest in.

 

[dcraig1]

First point to be made is that nobody knows if bank shares will return to levels nine months ago, though I personally wouldn't bet on it happening.

Second point is that financials are very volatile at the moment so some excellent profits are possible, but with corresponding substantial risk. eg XLF (US financials ETF) moved something like 10% yesterday. There is potential for a lot of damage if you get on the wrong side of the market which could happen in the blink of an eye if some important news comes out.

The question also is which financials - eg US regional banks are up lots since the July lows.

Having said all that, we *might* be looking at a market bottom. Many ETFs have had huge volume traded over the last couple of days - in some cases record levels. Have a look at SPY, DIA, QQQQ, XLF, XLE, IWM, MDY on Yahoo finance. This sort of huge volume often marks a short term bottom - but no guarantees and fundamentals still look crook.