Quelle surprise. The big five banks; Lloyds (LLOY), Royal Bank of Scotland (RBS), HSBC (HSBA), Standard Chartered (STAN) and Barclays (BARC) have all done the decent thing and cancelled/postponed dividends and buybacks for the next couple of quarters. A few weeks ago, I observed that 'the banks and the financial system are always geared plays on the equity market. It is in the nature of the beast'. If you did not believe it then, I am sure you think it now...
... With a bunch of corporate names tapping their credit lines, the government asking for banks to be deeply mindful of the financial situation of individuals they have lent money too and many, many corporate borrowers on the brink. But this cuts both ways. As we saw in 2007-9, you do not want systemic risk. At least today we have payment systems that work and hence a capability to pay for our food shopping or latest Amazon splurge, withdraw money from an ATM, settle our trades on the stock market and related. The big banks know that hacking off shareholders who fancied a dividend or even employees by squashing the bonus pool is chicken feed compared to a recession/depression cycle, starting with rising bad debts and ending with unsustainable balance sheets.
Given a choice I like small government but unless you go back to the gold standard or the localism of free banking, the government and its central bank will stand at the centre of the financial system, retaining the unique right to print money to help paper over the cracks. You do not need to be an adherent of the quantity theory of money to know that this cannot be done in perpetuity without consequences (and let's face it the falling velocity of money has really helped over the last decade to stave off inflationary threats)...but all of this is for another time and place. The big banks know that the government needs them to help keep the system functioning and by trading off on the dividends shorter-term, a broader range of medium and longer-term options become apparent. After all, just look at the different hassle levels faced by Barclays (private sector bailout) compared to Lloyds (material government stake) to RBS (very material government stake). If you want to minimise the chance of being forced to be a utility in the future, then you know what to do – and they all did it.
As for investing in the banks, they have learnt from 2007-9 and balance sheets are much, much better but - as detailed above - not immune to a lengthy lockdown. Investing in the names depends on your call on this. If you think the lockdown is going to ease by June then snaffle some here, if you don't then avoid...like a plague. Like much of the market it is a binary duration choice from a 2020 perspective.
Filed under: big banks, UK Oil & Gas, Tertiary Minerals, Bakkavor, ValiRx, Hays, Chris Bailey
RISK WARNING & DISCLAIMER - FiveFreeShareTips.com tips are provided by independent authors via a common carrier platform and do not represent the opinions of FiveFreeShareTips.com. FiveFreeShareTips.com does not accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at FiveFreeShareTips.com and via emails you receive from [email protected] are for your general information and use and are not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by the tipsters or FiveFreeShareTips.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Trading shares involves the risk of loss. The tipsters and FiveFreeShareTips.com shall not be liable for any losses or other damages incurred. The value of investments can go up or down and the past is not necessarily a guide of future performance.
Well actually it will be six. One every week day and one on Sunday, each landing with you at 11 AM sharp.
Unlike other services (which may always have a vested interest) we pride ourselves on our impartiality and cover all small caps including AIM. the Standard List, The Wider Main Market and NEX.
We cover small caps, penny shares, FTSE 350 stocks and blue chips. We look for red hot penny shares, Warren Buffett style value investments with yield and growth stocks. There is no technical analysis in our work just solid fundamental analysis from a team of experts with decades of stockmarket experience.
You will not agree with all we publish but if you are interested in small caps you cannot afford to ignore it either. Yo'll never be charged for the free share tips from Five Free Share Tips and given the star writers involved you know that they will move share prices.
There's no telephone number or postal address required and there is no charge, ever, for your Five Free Share Tips membership. Just free shares tips every day apart from Saturday And each day's share tip will not just be a few thoughts cobbled together but will be detailed analysis from experts.
Our experts do not just earn their living from writing. All own shares. If they own shares in a stock they cover they will declare it and will not sell until after advising a sell to our readers. And why not our tips are so good that why shouldn't our readers put their money where their mouth is?
Don't just take our word for it! Judge us on the calibre of our free share tips and join today to start receiving them from September 1 2017. If you don't like what you get delivered to your inbox unsubscribe and you will never hear from us again. So why not give it a go? Sign Up Now
We've put together a panel of top tipsters, including:
Tom Winnifrith, in his 27th year writing about shares, noted fraudbuster & dubbed "The maverick Tipster"
Chris Bailey, City whizz kid turned financial guru, rated as one of the top 50 commentators on shares on twitter, founder of Financial Orbit
Steve Moore, has worked with Tom Winnifrith for all bar 3 weeks of his working life - a noted commentator on value stocks
Malcolm Stacey, The Grandfather of Share Blogging, the founder of ShareCrazy & a best selling autthor of stockmarket books
Lucian Miers, the Bard of the Boleyn, one of the UK's best known short sellers
Gary Newman, writes about value investing on AIM, speciality is in share tips on oil and mining companies
Nigel Somerville, The Deputy Sheriff of AIM, an expert in forensic analysis a skill used to bust frauds but also to tip true value investments
The team from HotStockRockets, specialising in AIM and small cap shares which will fly on a three month view
Remember to book your place at the UK Investor Show 2018. The UK’s top investment show taking place on Saturday 21 April 2018 at the Queen Elizabeth II Conference Centre in Westminster, London. The show will feature a unique line-up of top speakers including Nigel Wray, tech queen Vin Murria, Dave Lenigas, Mark Slater, Tom Winnifrith, Adam Reynolds, Ed, Croft, Nick Leslau Luke Johnson and Dr Johnny Hon as well as 135 exhibiting small cap companies.
The hot share tips given here are of necessity, general. They cannot relate to the individual circumstances of investors. Anyone considering following the share tips contained here should seek independent advice from a Financial Conduct Authority authorised Stockbroker or Financial Adviser. We cannot be held liable if individuals suffer losses through following share tips contained on this site or emailed out as free share tips. The value of investments can go down as well as up. The past is not necessarily a guide to future performance. Investing in shares can lose you part or all of your capital although the potential returns are theoretically unlimited. The difference between the buy share price and the sell share price for smaller company shares (penny shares) can be significant. Profits from dealing in shares may be liable to tax - the level of tax and bases of relief from tax are subject to change. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Some of the shares recommended on this site will be smaller company shares. By their nature such investments can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares (or 'small caps'/'penny shares'). FiveFreeShareTips.com & its sister site ShareProphets.com defines a smaller company share as any stock traded on AIM or NEX or which has a market capitalisation of less than £300 million.