Banks have had a troubled time and share values have fallen significantly. Many of these look very good value now and I am sure that a long term investor will look back at this time as being a good time to buy. That said, they may fall further if the financial news deteriorates or more credit problems come out of the woodwork. In terms of investing I would go for a fund that invests in financial stocks and banks and let the fund manager make the decision on which to buy and when. Philip Gibbs at Jupiter runs probably the best financial fund, the Jupiter Financial Opportunities Fund, though it has to be said that he has a large cash position at the moment which suggests that he thinks that it is too early to buy yet.
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To be frank, buying shares in ANY bank right now offers way too much risk unless you are willing to spread it across multiple issues to reduce risk of anyone going under and potentially having to see the investments through (many look to 2010 for a considerable rebound).
Right now, even with the recent FED actions to curb downside risk, we still have credit spreads at the same ridiculous levels. It doesn't matter what type of bank anymore, the trickle down effect will play a role in some form or another. i.e. Goldman is looking to buy a bank so that it can have an easy source of financing (hmm, why would they want that unless they feel they could be in trouble). Merrill, today, said they are raising more capital and this time in the form of an equity offering (for 6 months+ they have been saying they had more than enough capital, would never need to revisit the equity market for capital, and were placed well for the future---scary times ahead here). Add in the fact that nearly every regional bank (domestic and international) has been in the chatter of which is next to face insolvency and you have outright panic.
Risk and reward go hand in hand for sure, but until the glass looks more full, I would simply avoid. I would rather be late to the party and miss out 10-20% gains (on a 200%+ gain ride), that hold on for losses of 25%+ at these levels.
Just remember that the "sheep" (and YES, this includes analysts alike), have been saying there will be no more write-downs and that -this- is the bottom. A dozen "bottoms" later and billions of write-downs later and we are still in the same boat with no sign of shore.
Spare yourself the sleepless nights and wait until we have higher lows and not lower lows in the market. **Be late to the party not early to the funeral**
The financial analysts and traders at the bank I work for currently advise against buying banking stock for another 3 months, as the write downs have not finished yet. They expect fellow banks to begin recovering at the beginning of 2009 (first quarter). This is the time when they will begin buying up stocks.
Banks that have little bussiness in the american or english markets would be the safest to invest in .
Buy in slowly, like 10% of your account at a time max.
buy a hedge stock, like energy (wind is en vogue atm), so if the banks do go south the hedge should go north.
Bearing in mind the current financial state, I think that buying shares in banks should be left to people who know what they're doing! If you have to ask it on here, it's probably too much of a risk for you
Right. HSBC,Barclays,RBS,NatWest. Now, those shares are cheap and good for investment.
