Anyone still holding bank shares?

[willair]

there's a reason for the "sell in may and go away" anecdote.

If NAB drops another 1% in the morning then i will have a think about buying another small amount,my last entry point was at $35 so i was a bit out on that one,you just have too accept short -mid term volatility in return for 2 to 5 to 10 year longterm gains..IMHO..willair..
http://www.forbes.com/markets/2008/...osure-markets-equity-cx_vk_0715markets02.html

 

[Aaron Sice]

Or buy more and dollar cost average - More gains when they go up again

I just put $10,000 into NAB. It might go down a little more. But I'm very sure it'll be back up again in 12 months time.

god not that argument again.

why not put that $10k into a leveraged spread until you see some directon with NAB?

 

[GreatPig]

I think AMP shows why dollar cost averaging is not always a good idea. If you started in 2001 when it was around $20, unless you bought a large percentage in 2003-2004 when it was below $5, you'd still be well behind (current price just over $6).

Gain over the last 10 years: -68%.

Or maybe News Corp. The price is currently the lowest it's been since 1997. Or Telstra, if you started buying in 1999 (price is currently around half that price).

GP

 

[alba]

I've got a recommendation to hold off buying financial stocks however attractive they might seem right now until October/November 2008 or February/March 2009.

It makes sense to me as even if we in Australia sofar escaped the "bloodbath" in the US or UK, job losses will inevitably result from a global slowdown, which in turn could end up wiping some value of the banks' balance sheets as more home or business owners could be forced to sell.

I do believe though that due to a number of other factors, property prices will not crash here and any dips will be short lived.

 

[Andrew_A]

It is interesting that despite overwhelming evidence to the contrary that share market timing is a game that is easy to play, there are so many who want to play

Truth is that a regular investment in an indexed investing approach will beat a majority of players over any decent length of time.

If you don't know how to quantify the alpha you generate then it's highly likely imo you aren't adding $$ value by attempting to pick and choose both shares and times to buy, it's still a fun game and there might be other rewards.. just not $$ rewards.

Anyway... Having said that... I'm liking the look of some of these divvies.. I bet I'm not the only one thinking that coming into August

 

[Aaron Sice]

i've been watching the dividends as well. very very tempting - but the risk of losing capital equal to the dividend (or more!) would see a waste of time and effort for nothing.

while this whole freddie mac / fannie mae thing is a storm in a teacup (the fed offering some cash reserve to improve their liquidity - should they need it - is NOT a bail out), i'm worried the floor traders will have a field day and sell it down. then when mumsndads are burned and out, it's ripe for the pickings. think ABC learning...sold down out of spite.

with any and all banks that WILL be affected if ANYTHING happens to FMac or FMae - look at IndyMac FFS! - i'd rather look towards day trading resources or ag stocks.

 

[Aaron Sice]

Truth is that a regular investment in an indexed investing approach will beat a majority of players over any decent length of time.

sorry dude that's very, very general advice.

if i had an iron condor spread strategy, and held it through the rough times, i'd still be in the red - there's a reason it's called "iron" condor - solid, sound, profitable investment 99% of the time.

sure you need to be very liquid to do it and very experienced in naked put writing, but you'd still be in the red.

 

[tubs]

I just purchased bank shares this morning. My first serious share investment.

The way I see it is:

1. Banks are no way going worth 40% less than they were 6 months ago. They still get interest payments from people, charge fees, invest their money etc. What they fundamentally do is still the same, and

2. Banks seem to have this ability to raise their prices any damned time they want through interest rates. If most businesses just decided to up their prices then people would just shop elsewhere. But the banks can make a bad decision (eg borrowings from the US) and just pass the impact on to end customers...who just accept it. So, in a way the banks are semi-immune to bad decisions. When you think about it, its a brilliant business to be in!

Anyway, time will tell...

 

[GreatPig]

Banks are no way going worth 40% less than they were 6 months ago

Maybe 6 months ago they were worth 50% too much?

GP

 

[Aaron Sice]

I1. Banks are no way going worth 40% less than they were 6 months ago.

and you can be certain that past performance is an indicator of the future?

mate, as sunfish said in another post - not one aussie bank or fund have reported on their exposure to the current problems.

what if they do - and it's bloody horrid?

i see a 40% "revalue" quite optimistic, considering FRE and FNM used to be $70 a share, now trading for $5 and $6 a share 12m later....

 

[willair]

and you can be certain that past performance is an indicator of the future?

You don't,you can plan-read everything you can and talk to a few that i know that do the same in the equities markets,but at the end of the day it's up too you,no one else,shorterm up and downs are virtually impossible to pick,and i agree with Andrew,the only way i know is too regulary invest that way over time..
BTW I like "VOLATILITY" it may bring the risk factor up a few % but it also creates opportunties that so many don't see..willair..

 

[Andrew_A]

Definitely not advice from me! All just opinion.

I don't quite understand what you said about the condor strategy, if you had done it you would be in the black?

sorry dude that's very, very general advice.

if i had an iron condor spread strategy, and held it through the rough times, i'd still be in the red - there's a reason it's called "iron" condor - solid, sound, profitable investment 99% of the time.

sure you need to be very liquid to do it and very experienced in naked put writing, but you'd still be in the red.

 

[Andrew_A]

Maybe 6 months ago they were worth 50% too much?

GP

Anchoring bias, might explain why past market darlings are so popular even after their fortunes have turned.

I think it explains part of the bias against 'high' property prices. I see the 90's pricing of resi property as not that great, far too low in this country.. which gives extra air to any baloon you might be seeing.

 

[Aaron Sice]

Definitely not advice from me! All just opinion.

I don't quite understand what you said about the condor strategy, if you had done it you would be in the black?

hell no - an iron condor strategy is - ah here - google it.

http://www.investopedia.com/terms/i/ironcondor.asp

even a condor spread might have been a better bet.

check it out.

 

[alba]

i've been watching the dividends as well. very very tempting - but the risk of losing capital equal to the dividend (or more!) would see a waste of time and effort for nothing.

while this whole freddie mac / fannie mae thing is a storm in a teacup (the fed offering some cash reserve to improve their liquidity - should they need it - is NOT a bail out), i'm worried the floor traders will have a field day and sell it down. then when mumsndads are burned and out, it's ripe for the pickings. think ABC learning...sold down out of spite.

with any and all banks that WILL be affected if ANYTHING happens to FMac or FMae - look at IndyMac FFS! - i'd rather look towards day trading resources or ag stocks.

Blue Card, I'm new to shares, only just starting to understand the principles. I am looking at NAB which sells for 26.31 and last time paid dividends of 97 cents apiece (I assume that 100% franked means after tax). It seems to me that this happens twice a year, so that would be just under 8% yield if my calculations are right. Money paid into my LOC account saves me 8.7% compounding. Sofar this doesn't make me press the buy button. Maybe after another 40% discount.

 

[Andrew_A]

Blue Card, I'm new to shares, only just starting to understand the principles. I am looking at NAB which sells for 26.31 and last time paid dividends of 97 cents apiece (I assume that 100% franked means after tax). It seems to me that this happens twice a year, so that would be just under 8% yield if my calculations are right. Money paid into my LOC account saves me 8.7% compounding. Sofar this doesn't make me press the buy button. Maybe after another 40% discount.

Alba you can have a look at the dividend yields in Excel from this AFR data

I use Excel to sort by yield and have a look at what's happening over the whole ASX300.

 

[alba]

Thanks Andrew, so my calculation was about right, yield for NAB is 7.3%. There are some very cheap ones with a lot higher yield, not sure what's the catch, but I will be using this tool to learn more about the market before diving in.

 

[dave99]

BlueCard, why would you get an iron condor which has such a limited upside? Might as well put the money in the bank.

AMP, News & Telstra may be down from their historical highs, but BHP and others are way up on 12-18 months ago. Diversify to minimise risk, and DCO works.

 

[Aaron Sice]

Blue Card, I'm new to shares, only just starting to understand the principles. I am looking at NAB which sells for 26.31 and last time paid dividends of 97 cents apiece (I assume that 100% franked means after tax). It seems to me that this happens twice a year, so that would be just under 8% yield if my calculations are right. Money paid into my LOC account saves me 8.7% compounding. Sofar this doesn't make me press the buy button. Maybe after another 40% discount.

that' a good dividend!

but highlights my point.

dave99 - an iron condor is employed with limited upside because it's designed for a channelling market with the preference on the sideways or down. naked puts are far more profitable that covered calls because the $VIX is SO high at present.

bear market we are in, why would i be trading for long profit? there are 3 ways for the market to go, the iron condor or condor spread are design for 2 of those which we are seeing now.

trick is to pick a peak like the 6000 we saw a few months ago.

if AMP, news and telstra are down, an miners are up, then your DCA position has bought you a BE position. an iron condor or condor spread would have you in profit.

i'm no fan of DCA-ing, buying more into a losing position to protect the money you invested earlier just doesn't make any sense to me. i'd rather sell, realise a small erosion of profit and move on - or reverse my position.

 

[willair]

bear market we are in, why would i be trading for long profit? there are 3 ways for the market to go, the iron condor or condor spread are design for 2 of those which we are seeing now.

trick is to pick a peak like the 6000 we saw a few months ago.


i'm no fan of DCA-ing, buying more into a losing position to protect the money you invested earlier just doesn't make any sense to me. i'd rather sell, realise a small erosion of profit and move on - or reverse my position.

Blue Card, just have to ask your entry exit gst and several other costs factors must eat into your bottom line,it's taken me a long time to undestand DCA but it does work if you use a 2 -5 year time horizons what works for some does not always work for everyone..
willair..