RBS shares for a first timer,bad move?
Discussion
afternoon all
you will probably think im really stupid but here goes..
after talking to a friend with RBS shares im fairly tempted about £1000 worth, he bought them just as the recession hit for something like a 1/3 of there value but they have since taken a further hammering and he is just going to ignore them for the next 5,10 or maybe 15 years in the hope they may give him a nice return by then. ( he invested £5000, and i think £10-15000 return would make him sell)
now is he on a different planet, or on to something thats atleast worth a go.
the way i see it in my bugger all knowledge on the matter is if i bought £1000 worth now surely they cant lose much more value, and in say 5-10 years could they double,triple in value?
the reason i aim about 1k is if i lose it so be it, but if its much more than that i probably couldnt bring myself to do it...
be as brutal as you like, i can take it
you will probably think im really stupid but here goes..
after talking to a friend with RBS shares im fairly tempted about £1000 worth, he bought them just as the recession hit for something like a 1/3 of there value but they have since taken a further hammering and he is just going to ignore them for the next 5,10 or maybe 15 years in the hope they may give him a nice return by then. ( he invested £5000, and i think £10-15000 return would make him sell)
now is he on a different planet, or on to something thats atleast worth a go.
the way i see it in my bugger all knowledge on the matter is if i bought £1000 worth now surely they cant lose much more value, and in say 5-10 years could they double,triple in value?
the reason i aim about 1k is if i lose it so be it, but if its much more than that i probably couldnt bring myself to do it...
be as brutal as you like, i can take it
It's generally a bad move to put all of your eggs into one basket, so to speak, unless you have a good reason to do so (for example you are part of the company's ShareSave scheme as an employee, so get shares at a discounted rate).
When looking at holding any share long term you have to consider what may happen to the company long term. In RBS' case, the obvious issue is that at some point in the medium term the shares may cease to be listed in London (as part of a possible Scottish independence vote) which could have all kinds of crazy effects.
If I were you, I would spend it on coke and hookers, or failing that put it into some kind of tracker fund - the FTSE will run quite strongly over the next few years I should think.
When looking at holding any share long term you have to consider what may happen to the company long term. In RBS' case, the obvious issue is that at some point in the medium term the shares may cease to be listed in London (as part of a possible Scottish independence vote) which could have all kinds of crazy effects.
If I were you, I would spend it on coke and hookers, or failing that put it into some kind of tracker fund - the FTSE will run quite strongly over the next few years I should think.
rich85uk said:
the way i see it in my bugger all knowledge on the matter is if i bought £1000 worth now surely they cant lose much more value, and in say 5-10 years could they double,triple in value?
They 'could' lose everything and your shares be worthless - never think a share can't fall further, it always can.It's only £1k and it doesn't make sense to spread it over more than one company (due to transaction fees). If you can afford to lose it then there are worse places for you to put it...it is a gamble but I would say one probably worth taking.
Also, maybe consider MAN Group - they took a hammering after the crunch but released relatively up beat results the other day and they too could see a significant rise over the coming years.
I doubt you would lose 100% They are only just out of the toilet.
RBS had a bad quarter, with their profit and earnings down so there is a decent possibility of a recovery.
I don't think your friends 5K is going to turn into 10 - 15. Well not for a while anyway
They'll be up on Monday open (I think) 'cos of the rate change.
If I bought them I would be looking for 30 - 40%, I'd say thank you very much and move on.
Even if it moved on to +60% I would still not regret the sale, you have to leave something for the next man.
ETA
Just ignore everything I said, I did not read correctly, I did not see the 5 10 15 year bit. Doh.
But I will add that any individual share cannot be ignored.
RBS had a bad quarter, with their profit and earnings down so there is a decent possibility of a recovery.
I don't think your friends 5K is going to turn into 10 - 15. Well not for a while anyway
They'll be up on Monday open (I think) 'cos of the rate change.
If I bought them I would be looking for 30 - 40%, I'd say thank you very much and move on.
Even if it moved on to +60% I would still not regret the sale, you have to leave something for the next man.
ETA
Just ignore everything I said, I did not read correctly, I did not see the 5 10 15 year bit. Doh.But I will add that any individual share cannot be ignored.
Edited by jeff m2 on Saturday 3rd March 20:15
davepoth said:
If I were you, I would spend it on coke and hookers, or failing that put it into some kind of tracker fund - the FTSE will run quite strongly over the next few years I should think.
thanks, dont touch coke but it just so happens i will be off to amsterdm in may so where soft drugs and hookers are in there 100's 
also whats the benefits of a trcker fund? i was under the impression NO savings account is worth doing at the mo unless you have serious amounts of cash
When you look at RBS...forget the share price...atthe current share price the company is still valued at £30bil. Which for a company that essentially hasn't hasn't made money for three or four years is quite a lot!
Basically as has been written about large parts of RBS are still in run off, it has a huge legacy portfolio of risk but there is still a decent franchise in there too. The gamble you are taking is
a) that management can shrink the size of the bank
b)that the remaining legacy assets (of which there are a lot) don't blow the bank up
c )that the core business continues to make money to pay for a) and b)
That's pretty much it.
RBS was techincally insolvent when it was bailed out and pretty much has been since...they are only selling assets and businesses when they can afford to through profits that the remaining business makes. If that business stops making money or they get forced to take losses more quickly it's game over...not a huge probability but it could happen.
RBS is basically a bet on the UK economy and the global financial system.
Basically as has been written about large parts of RBS are still in run off, it has a huge legacy portfolio of risk but there is still a decent franchise in there too. The gamble you are taking is
a) that management can shrink the size of the bank
b)that the remaining legacy assets (of which there are a lot) don't blow the bank up
c )that the core business continues to make money to pay for a) and b)
That's pretty much it.
RBS was techincally insolvent when it was bailed out and pretty much has been since...they are only selling assets and businesses when they can afford to through profits that the remaining business makes. If that business stops making money or they get forced to take losses more quickly it's game over...not a huge probability but it could happen.
RBS is basically a bet on the UK economy and the global financial system.
chris7676 said:
Your friend is a mug - it's always a bad idea to ignore your investment
Quite right.Tell your friend to imagine that he didn't own those shares and instead had the cash equivalent at the current value in his bank. Would he buy RBS again with that cash?
If the answer is no then he should sell them.
chris7676 said:
Your friend is a mug - it's always a bad idea to ignore your investment assuming it can only go up, and even more so in such a entangled (screwed/difficult) idustry. Not to say they will do bad from the current levels, but then there are better bets.
not so much mug,just slow and new to shares. in short he spent 5k on RBS shares just after the crunch, they doubled a while after but he hung on to them( probably greed and being to slow) and now they are only worth about 2kwho would you say the better bets are? or you talking betting in general?
rich85uk said:
Cheib said:
RBS is basically a bet on the UK economy and the global financial system.
thats pretty much how i viewed it, but then i guess is there a chance that our economy will still be in a fairly similar situation in 5-10 years time?That is fairly unlikely as regualtors/centrla banks are extremely worried about the domino effect. Lehman taught them that.
In five to ten years RBS should look like a very UK centric conservatively run bank making £3 or £4 bil a year. But that is what is priced in at a £30bil market cap. It's about the right price but there is a lot of execution risk along the way.
Edited by Cheib on Tuesday 6th March 19:37
fido said:
jeff m2 said:
I doubt you would lose 100%
But why take the risk?! Split the money 5, or 10, or even 20 ways. Heck why not place 1 lot on a roulette wheel - at least you will have the average of 20 outcomes.
For a 'buy and hold' it is probably a low risk venture. The risk of RBS going out of business is minimal. The probability of upside is reasonable in 5-10 years is likely to be good considering the marco-economic cycles the world goes through.
A few thoughts:
RBS is majority owned by a group desperate to sell. This will hold the price down for years in contrast to peers.
It is losing money as it unwinds its appalling book of bad business.
It owns ABN so what happens if the Netherlands leave the Euro or the Euro collapses?
It has massive exposure to the Euro zone.
It owns an Irish bank that is insolvent.
It, itself is basically insolvent.
It has no exposure to the parts of the world which are growing.
It can never hire the best staff as the taxpayer won't let it.
You are already exposed to RBS by over £1000 in the first instance and have already lost a lot of money.
Thousands of punters have bought RBS all the way down and have lost millions. They are just trying to talk up their own loss making book.
RBS is not an investment in any way shape or form.
An investor would have more pleasure buying a bunny for their children and shooting it in the face as part of the entertainment at their next birthday party.
RBS is majority owned by a group desperate to sell. This will hold the price down for years in contrast to peers.
It is losing money as it unwinds its appalling book of bad business.
It owns ABN so what happens if the Netherlands leave the Euro or the Euro collapses?
It has massive exposure to the Euro zone.
It owns an Irish bank that is insolvent.
It, itself is basically insolvent.
It has no exposure to the parts of the world which are growing.
It can never hire the best staff as the taxpayer won't let it.
You are already exposed to RBS by over £1000 in the first instance and have already lost a lot of money.
Thousands of punters have bought RBS all the way down and have lost millions. They are just trying to talk up their own loss making book.
RBS is not an investment in any way shape or form.
An investor would have more pleasure buying a bunny for their children and shooting it in the face as part of the entertainment at their next birthday party.
chris7676 said:
I'm not a financial advisor (luckily for you but I would look at smaller oil related companies, lots of upside (and some risk too) over there which makes sense if you only risk a £1000.
If you want to lose your money - invest in an exploratory oil company. but I would look at smaller oil related companies, lots of upside (and some risk too) over there which makes sense if you only risk a £1000.You would be far better of playing roulette.
Rich, as a novice investor myself what I've learned so far is not to listen to what anyone tells you either on here or elsewhere. Someone on this forum recommended buying shares in a company called Red Rock Resources a year or 2 ago when the shares were worth 15p each - they are now worth 2.5p each. The only way to do it is read up as much as you can on the sectors / companies that interest you and get stuck in, I use an on-line share dealing account with motleyfool.co.uk. My personal belief is that there are cheap shares out there that will return good money in the medium to long term - thats another thing, dont expect to make money quickly, you're more likely to make money in the medium to long term assuming the economic recovery ramps up. I did dabble in bank shares, lost some, gained some, I'm now looking moreso at housebuilders as I believe there is growth to come in that sector and most of them are starting to pay dividends again. In summary take any advice you get with a huge pinch of salt, have fun and dont put up more than you can afford to lose
Gassing Station | Finance | Top of Page | What's New | My Stuff