If FTSE breaks to decent new highs I will again hedge against this additional bank equity exposure.
Today's trade:
Date Transaction Symbol Unit Cost Quantity Fees Value
27 Oct 2017 BUY BARC 1.84025 800 £19.31 £1,491.51
GS
Thanks to Shelford,GrahamPlatt,gpadsa,Steffers0,lansdown, for Donating to support the site
Date Transaction Symbol Unit Cost Quantity Fees Value
27 Oct 2017 BUY BARC 1.84025 800 £19.31 £1,491.51
Kipling wrote:GS,
I've found your posts really informative and I like the whole idea of trying to turn £3000 into £1 million, so I'll say challenge accepted.
My chosen vehicle is a Lifetime ISA managed through Youinvest - I'm going to take advantage of that because at 36 it'd seem churlish not to take advantage of £750 next April.
My first move has been to take 20 units of SEMB at around £85 - the reasoning behind that is the monthly income will offset portfolio admin and buying costs in the near- and medium term.
Again, many thanks for your posts, they've been a part of my night reading on many a dull watch,
K.
Date Transaction Symbol Unit Cost Quantity Fees Value
26 Feb 2018 BUY LLOY 68.554 3200 £22.92 £2,216.65
Description Symbol Unit Price Quantity Fees Value
BUY RBS 2.6097 700 £21.08 £1,847.87
Date Transaction Symbol Unit Cost Quantity Fees Value
08 May 2018 BUY LLOY 66.075 2800 £21.20 £1,871.30
GoSeigen wrote:Added to the LLOY position today. This is now a farm bet on UK bank equity with roughly 60% exposure divided equally among BARC, RBS and LLOYGS
GrandOiseau wrote:GoSeigen wrote:Added to the LLOY position today. This is now a farm bet on UK bank equity with roughly 60% exposure divided equally among BARC, RBS and LLOYGS
Perked my interest - what's the rational behind that?
GoSeigen wrote:I personally find it hard to find to see negatives for the banks. There are various company-specific risks and I think at some point a general market downturn could take their prices down again, but in such a case I'd be a buyer seeing a further bullish point appear!
johnhemming wrote:GoSeigen wrote:I personally find it hard to find to see negatives for the banks. There are various company-specific risks and I think at some point a general market downturn could take their prices down again, but in such a case I'd be a buyer seeing a further bullish point appear!
I have a lot of bank equity for similar reasons. I think the biggest threat in the short and medium term is Brexit, but I think they are so undervalued that it has essentially been priced in.
Spet0789 wrote:johnhemming wrote:GoSeigen wrote:I personally find it hard to find to see negatives for the banks. There are various company-specific risks and I think at some point a general market downturn could take their prices down again, but in such a case I'd be a buyer seeing a further bullish point appear!
I have a lot of bank equity for similar reasons. I think the biggest threat in the short and medium term is Brexit, but I think they are so undervalued that it has essentially been priced in.
50% fall in U.K. property prices? Perfectly possible in my opinion, even likely. U.K. banks would survive that but that excess capital would melt like ice cubes in a sauna. No dividends for a decade.
GoSeigen wrote:
I agree it's possible. It would barely affect bank capital though. Mortgage debt is not linked to property values -- the property is merely collateral. Much of that collateral is already at better than 50% LTV anyway. When house price falls arrive, home owners themselves are going to take the hit to their net worth.
GS
OhNoNotimAgain wrote:When has there been a property crash where banks did not get hit?
GoSeigen wrote:OhNoNotimAgain wrote:When has there been a property crash where banks did not get hit?
I don't know. When?
GS
OhNoNotimAgain wrote:GoSeigen wrote:OhNoNotimAgain wrote:When has there been a property crash where banks did not get hit?
I don't know. When?
GS
Well done that boy.
GoSeigen wrote:Spet0789 wrote:johnhemming wrote:I have a lot of bank equity for similar reasons. I think the biggest threat in the short and medium term is Brexit, but I think they are so undervalued that it has essentially been priced in.
50% fall in U.K. property prices? Perfectly possible in my opinion, even likely. U.K. banks would survive that but that excess capital would melt like ice cubes in a sauna. No dividends for a decade.
I agree it's possible. It would barely affect bank capital though. Mortgage debt is not linked to property values -- the property is merely collateral. Much of that collateral is already at better than 50% LTV anyway. When house price falls arrive, home owners themselves are going to take the hit to their net worth.
GS
Spet0789 wrote:I’m afraid that’s a naive view.
Firstly, there are enough mortgages with LTV worse than 50% that, accompanied by the higher defaults we would expect to see in that environment, the banks would be foreclosing and booking losses. That would obviously hurt the numerator of their capital ratios.
Secondly and far more importantly, the risk weighted capital consumption of a mortgage book is a (highly convex) function of LTV. 1bn of 50% LTV mortgages consumes almost no capital. If those become 100% LTV following a fall in market value, even those mortgages that continue to be repaid will consume many many times more capital. It is this factor which will blow the doors off.
The PRA will either require a capital raise, or shut off divis for 5 odd years until capital is rebuilt. Either way, the stock is toast.
For this reason, until we see a normalisation of house prices (ie a fall>30%), I wouldn’t touch UK banks. I am more conservative than that.
Return to “Trading my way to a million”
Users browsing this forum: No registered users and 2 guests