Trading the stockmarket (NO Referrals)

Dividend yield on some of the banking/financial stocks is likely to exceed what you can get in a savings account, maybe not within the next year, but in the next 3-10. I was looking at some of the banking stocks and thinking they were vastly undervalued in comparison with their assets.
 
daz said:
Dividend yield on some of the banking/financial stocks is likely to exceed what you can get in a savings account, maybe not within the next year, but in the next 3-10. I was looking at some of the banking stocks and thinking they were vastly undervalued in comparison with their assets.
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I'm getting 8% on my BP shares.

Dividends make it all the sweeter with share investments. I also work for BP so I'm maxing the schemes out and reinvesting the dividend payouts, they have a nice cumulating effect.
 
daz said:
Dividend yield on some of the banking/financial stocks is likely to exceed what you can get in a savings account, maybe not within the next year, but in the next 3-10. I was looking at some of the banking stocks and thinking they were vastly undervalued in comparison with their assets.
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Theres a very good reason why. If you do not already know the link below properly then the fact is you shouldn't be trading. Traders make money via arbitrage, be that in the short or long term. The definition of arbitrage is very strict. Just because you have made x for holding a stock for time t, doesnt mean you have beaten the market. Also as N9ne said, trading (defined by what people are doing here) and investing are different.

http://en.wikipedia.org/wiki/Modern_portfolio_theory - taught in the most basic of finance courses.
http://en.wikipedia.org/wiki/Arbitrage_pricing_theory - similar results via APT model


As for this entire thread, massive fail. Unless you have taken proper finance courses, you are making complete guesses.

Even if you have a lot of experience and training, the probability of returns are still highly variable and arguably insignificant. Making money is difficult and equity markets are highly fluid. Look at the number of hedge funds. How many actually outperform the market? Maybe you could come up with a decent percentage, but you have to remember that there is a MASSIVE selection bias with hedge funds. It takes a recession usually to reveal this.

As for banking stocks being undervalued (not sure by exactly what measure), but via the balance sheet, the problem is that some of the assets are simply impossible to believe and/or very difficult to price.
 
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If you're worried about making guesses and concerned about choosing the wrong shares then now is the perfect time to get a simple index tracking fund in an ISA. Up to £7.2k tax free each year. Accumulate dividends and watch it grow.

Long term equities always prevail and with an index tracker you don't have to worry about picking dud shares.
 
I've been involved a bit in the last few years - few good deals I made good money out of , and a few bad deals I lost even more on :p - so I've stayed away for a while.

Although I still have a couple of grand in my trading account, so I haven't written the idea off completely
 
ghost101 said:
Theres a very good reason why. If you do not already know the link below properly then the fact is you shouldn't be trading. Traders make money via arbitrage, be that in the short or long term. The definition of arbitrage is very strict. Just because you have made x for holding a stock for time t, doesnt mean you have beaten the market. Also as N9ne said, trading (defined by what people are doing here) and investing are different.
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You're absolutely right - I was talking in relation to a long term investment rather than trading, however. (but I thought that would have been obvious by my mentioning of dividends in the first place)
 
daz said:
You're absolutely right - I was talking in relation to a long term investment rather than trading, however. (but I thought that would have been obvious by my mentioning of dividends :confused: )
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But even in the long term. Say you model increases dividends from years 3-10, you have to discount such dividends by the savings rate plus a risk premium. So I was saying that the stocks arent necessary mispriced.This would be the APT model I mentioned above.

http://en.wikipedia.org/wiki/Arbitrage_pricing_theory

Of course you could be correct in that they are underpriced, but in such a model you will get very conflicting discount factors, analyst to analyst. Also, you do not have to wait the full term to take advantage of the future dividends. You should be able to simply sell the asset when it is correctly priced.
 
ghost101 said:
But even in the long term. Say you model increases dividends from years 3-10, you have to discount such dividends by the savings rate plus a risk premium. So I was saying that the stocks arent necessary mispriced.This would be the APT model I mentioned above.

http://en.wikipedia.org/wiki/Arbitrage_pricing_theory

Of course you could be correct in that they are underpriced, but in such a model you will get very conflicting discount factors, analyst to analyst.
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I agree totally.

As for banking stocks being undervalued (not sure by exactly what measure), but via the balance sheet, the problem is that some of the assets are simply impossible to believe and/or very difficult to price.
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I think people have decided that the sky isn't necessarily falling anymore, and that the apocalypse isn't happening, contrary to what the media were telling everyone. There is a recession, sure, but things will go back to normal in due course.
 
ghost101 said:
Theres a very good reason why. If you do not already know the link below properly then the fact is you shouldn't be trading. Traders make money via arbitrage, be that in the short or long term. The definition of arbitrage is very strict. Just because you have made x for holding a stock for time t, doesnt mean you have beaten the market. Also as N9ne said, trading (defined by what people are doing here) and investing are different.

http://en.wikipedia.org/wiki/Modern_portfolio_theory - taught in the most basic of finance courses.
http://en.wikipedia.org/wiki/Arbitrage_pricing_theory - similar results via APT model


As for this entire thread, massive fail. Unless you have taken proper finance courses, you are making complete guesses.

Even if you have a lot of experience and training, the probability of returns are still highly variable and arguably insignificant. Making money is difficult and equity markets are highly fluid. Look at the number of hedge funds. How many actually outperform the market? Maybe you could come up with a decent percentage, but you have to remember that there is a MASSIVE selection bias with hedge funds. It takes a recession usually to reveal this.

As for banking stocks being undervalued (not sure by exactly what measure), but via the balance sheet, the problem is that some of the assets are simply impossible to believe and/or very difficult to price.
Click to expand...

A+
 
I recently put some of my savings into shares, I split half my savings into a bank at 3% interest and half into shares basically, so even if I do lose some money I won't lose everything.

I invested as follows:

BP Plc
Barclays Plc
Lloyds
GlaxoSmithKline
National Grid

I have no idea if my investments are awesome, or the best! but I figure people will always needs power, petrol, banks etc, and I checked the previous performance of some of these shares and they have all got some headroom from their current values to their previous top levels, which i'm hoping they will realise in the coming months. I figure everything has been hit by the credit crunch, but I have this feeling that things are going to start picking up a bit, call it a gut feeling or whatever but I think we've seen the worst of it so far.

I was going to buy shares in Barclays when they went ridiculously cheap but for some reason didn't :(

It's a gamble in the end, i've made a small ammount in the last week (few £££) but they can fall as quick as they rise
 
Eulogy said:
I recently put some of my savings into shares, I split half my savings into a bank at 3% interest and half into shares basically, so even if I do lose some money I won't lose everything.

I invested as follows:

BP Plc
Barclays Plc
Lloyds
GlaxoSmithKline
National Grid

I have no idea if my investments are awesome, or the best! but I figure people will always needs power, petrol, banks etc, and I checked the previous performance of some of these shares and they have all got some headroom from their current values to their previous top levels, which i'm hoping they will realise in the coming months. I figure everything has been hit by the credit crunch, but I have this feeling that things are going to start picking up a bit, call it a gut feeling or whatever but I think we've seen the worst of it so far.

I was going to buy shares in Barclays when they went ridiculously cheap but for some reason didn't :(

It's a gamble in the end, i've made a small ammount in the last week (few £££) but they can fall as quick as they rise
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I suspect with the banks over the next year or so you'll come good... But it's all a big guess isn't it! One bit of bad news and down they tumble again!
 
NeilFawcett said:
I suspect with the banks over the next year or so you'll come good... But it's all a big guess isn't it! One bit of bad news and down they tumble again!
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Let's hope so :)

I didn't put anything into RBS because I don't trust them, but maybe I will regret that choice

Oh btw if anyone is interested I trade through Hargreaves Lansdown, can do all trading online etc
 
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