Wednesday, Jan 21, 2009
Consolidation in everything is more or less a given. Or is this just conspiracy nonsense?
Telegraph: Fundamentalist View: 'There will be only two London-listed banks left by the end of 2009'
But the government is now the largest, or only, shareholder in Lloyds/HBOS, RBS and Northern Rock and it seems highly likely that HSBC and Standard Chartered will be the only UK-quoted bank shares by the end of 2009.
Even in these tough markets, however, it is worthwhile to continue to think about the need for long-term, inflation-beating investments to fund or supplement retirement. UK equities can do this over the long term because gross domestic product (GDP) – a measure of economic output – growth will return and plenty of companies are in decent shape to benefit from this.
Posted by flintster1994 @ 08:41 PM (874 views) Add Comment
13 Comments
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1. fjcruiser said...
Good article except about the comment that the yield of the All Share Index is at the highest it has been since record began. A lot of companies are in the process of cutting their dividends, so apart from the usual defensives, there will not be much else you would want to invest in.
Listening to the BBC news last night, it was interesting to hear that journalists and politicians have made no secret that Barclays will be nationalised as well. Strangely, there has been no denial from Barclays.
2. little professor said...
Who would have predicted that Northern Rock, Bradford & Bingley, Alliance & Leicester and HBOS would all cease to exist as listed banks? RBS is 70% owned by the government and still in trouble, they and LloydsTSBHBOS are strong candidates for full nationalization and public ownership. That would leave only Barclays, HSBC and StanCharted. I don't think that scenario is so far-fetched.
Mind you, the author is the manager of a unit trust that has lost 20% in the last year, as opposed to a sector average of 10%.
3. little professor said...
4. flintster1994 said...
lp,
wow. Great representation.
5. nopensionnohouse said...
Great illustration. I have heard of bar, line and pie etc charts. What are these called?
6. little professor said...
Flint - it's a bit misleading though, it's not geometrically accurate. The analyst has confused area with diameter.
If you look for example at Santander and JPMorgan, you can see that their market capitalization has halved, but from the picture it looks like they have quartered, based on the areas of the blue and green circles. Rather than halving the diameter of the green circle, they should have halved the area of the green circle.This makes things look a lot worse than they are.
7. Davecrash said...
Indeed, it is a great representation, it says it all really, lots and lots of bubbles.
8. brickormortis said...
This looks great but I agree, LP, it is geometrically inaccurate. The diameter is a linear measurement in one dimension. Area is bidimensional. The Ratio of the areas is the square of the ratio between the two diameters. i.e. if the linear scale factor of enlargement is two (as is roughly the case with JP Morgan), then the area scale factor will be the square of 2, which is 4. So you have exaggeration by a scale factor of the square of the ratio between the two years' market value.
If you want to do this you must draw the diameter of the 2009 circle as "diameter of 2007 * square root of (Market value 2009/market value) 2007)"
9. brickormortis said...
S@@t, I meant...
...If you want to do this you must draw the diameter of the 2007 circle as "diameter of 2009 * square root of (Market value 2007/market value) 2009)"
which reads better.
10. bellwether said...
If your investements grow 4.4% annually during the biggest asset boom in a century ( ie less than you would have got in a savings account) (a) why are you being allowed to manage a 2.4bn fund, and (b) why would anyone want to listen to you about what might happen next.
11. bellwether said...
On the loss of market value of RBS, if you had invested £1 million in it just over a year ago and say gone off round the world and come back on tuesday your £1million investment would have been valued at £14,000. Mind you it waited until this morning it would have risen to £20,000.
12. Kelvin Newman said...
blind leading the blind ;)
13. mark wadsworth said...
Maybe there'll only be two listed banks, but I hereby boldly predict the revival of the Good Old Fashioned Building Society.