Wise to buy RBS shares longterm?
 

Thoughts?

*Looks into crystal ball




Maybe.

Maybe. Maybe not. If you cannot analyze RBS and make a quantitative judgment on the investment, then you should not invest. Bear in mind that when I say "you," I mean anyone really. A lot of banks have very twisted and wacky balance sheets full of baloney and may be virtually impossible to value. To buy under such conditions would be gambling.

Now, if you are interested in reaping the potential long term rewards of a recovery in the banking sector, which I agree makes sense since banking isn't going anywhere, then perhaps you might do well to pick up a basket of financial stocks by way of a low cost ETF (Equity Traded Fund) or mutual fund. Ideally, you would want to buy in pieces as opposed to all at once. You get limited exposure to individual banking failures while receiving some of the benefits of the recovery that is very likely to happen over the years.

Mutual funds etc confuse me atm so far as I don't really havea great deal of time to get my head around them with honours year etc, but definetly something I'm going to get to grips with in the future.

I was considering buying about 100-200 worth of rbs shares, not alot I know but considering they are at 90p just now and were 500+ a few months ago they must recover. Although having said that, what would happen if it collapsed? Are shares then worthless? or do you just get an offer from whoever takes over the company that they are paying x amount for your shares?

If RBS goes bust, your share is then worth close to zero.

If somebody else takes it over, it'll all depend on how much they pay for it. If RBS is close to bust, they won't pay much for it. Might end up being close to zero in any case.

Then if the governments do bail out financials in Europe, there might still be the one or the other opportunity now.

Well considering RBS owns a lot of the big named banks, I can't see RBS going anywhere soon. If they did go bust, then you'd lose a load of other banks at the same time.

Never say never.

I work for RBS (ex ABN).
I just had the most depressing day of my 12 year career.

I agree with "Never say never."

What we have seen thus far has been astonishing. RBS is a massive bank, but so were WaMu and Wachovia, for example.

Buying a company like RBS without understanding anything about the business simply because the price went down and it must one day go back up would be more like buying a lottery ticket than investing. To do so would be very risky.

Now that's not to say that RBS is a bad investment. I do not know. But according to the news, your government plans to announce its intentions tomorrow morning insofar as shoring up the nation's banking system is concerned. Given the price action today, people clearly suspect that RBS might be one of the banks that needs money. In general, this activity could result in banks being nationalized or, at the very least, in shareholders being massively diluted. In either case, shareholders will be punished.

As an owner of Lloyds TSB, I find this development somewhat concerning. On the other hand, I remain confident in the quality of Lloyds's balance sheet and capitalization.

They terminate Hawaiian shirt Wednesdays?

Evil but funny... [rofl]

Funny I heard the same theory about the Iraq Dinar a few years back. In the 80s you used to get a few Dollars to the Dinar but in 2004 a Dollar would buy you almost 1500 Dinars. The theory of course was that surely the Dinar had to return to it's 80s value. I'd be very careful of applying that idea to stocks.