by The Investor
on January 28, 2009
With the price of bank shares being driven by fear, should we avoid them completely? Or if we do want to get specific exposure to banks, which banks look the best?
As a private investor, I can only tell you what I’m doing (and remind you an index tracking fund should underpin your portfolio, not individual stock picks).
My personal view is that bank shares will continue to oscillate wildly until house prices stop falling. Then banks should begin to strengthen.
Further falls in house prices in the UK (which I expect) will hit our banks further, though I suspect the scale is now manageable after their capital raising and/or government injections. Much will depend on the performance of their other debt, such as loans to companies struggling through a recession.
The positive spin is that absent a global economic meltdown causing 30-40% of homeowners to default, any bank that survives the credit crisis will at some point be worth a lot more than today. Assets such as mortgages that were previously written right down will then be revalued upwards. (See my post on Prodesse, the investor in US mortgages).
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by The Investor
on January 27, 2009
Barclays Bank shares rose 72% on January 27th
Source: Digital Look
I don’t know what annoys me more: That Barclays Bank shares rose 72% on Monday while I was still finishing off a post suggesting they might be worth a punt, or that I didn’t buy any myself.
Oh ‘greedy’ side of the fear-greed investing equation, how we’ve missed you.
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by The Investor
on January 26, 2009
There are three main things that drive changes in a corporate bond’s yield and so its price:
- The closeness to the redemption date
- The interest rate environment
- The perceived risk of the bond defaulting
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by The Investor
on January 21, 2009
Just as governments issue bonds to finance public spending, so companies issue bonds to raise money to invest in their business.
For companies, corporate bonds provide an alternative to raising money by issuing shares. For private investors, corporate bonds offer the opportunity to buy a fixed income in exchange for an investment of capital.
All types of corporate bonds share common traits that you need to understand before you consider an investment.
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