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Spread Betting Banks

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This is my plan.

This government won't let the banks go bust. Bank shares are still low. I'm thinking to buy the banks using the spread betting system. I already have an account with IG.

So the banks will continue to climb. This would involve leaving the bets running for several months.

I believe the bets auto stop at weekends, but just restart them on Monday, with some loss due to the spread. I know I have to get a roll-over set-up for each evening or the bets will auto stop daily.

Any comments. Is there a better way to do this, etc.?

Any advice welcome and thanks,

Nick

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This is my plan.

This government won't let the banks go bust. Bank shares are still low. I'm thinking to buy the banks using the spread betting system. I already have an account with IG.

So the banks will continue to climb. This would involve leaving the bets running for several months.

I believe the bets auto stop at weekends, but just restart them on Monday, with some loss due to the spread. I know I have to get a roll-over set-up for each evening or the bets will auto stop daily.

Any comments. Is there a better way to do this, etc.?

Any advice welcome and thanks,

Nick

Well, your first two sentences are interesting!

You might want to be precise over what you mean by "bust". The government may be more concerned with protecting deposit holders than equity holders. It's quite possible for the equity holders to be wiped out (ie for the shares to lose all their value) without any deposit holders being affected. I guess the government are the equity holders in some banks though...

As for bank shares being low, I suppose it's clear that they're low compared to past levels. But are they low on other, forward looking, measures? Specifically, are they low compared to the value of the cashflow that they can generate and sustain? Do you believe that the legacy issues - non-performing loans etc - are adequately reflected in the price today? Or could these undermine future cashflow generation?

How much money are you planning to invest / hoping to make? If you're not going to exhaust your £10k CGT allowance here you might be better off just buying shares directly rather than going down the spread betting route because of costs, dividends (you never know....) etc.

As with any investment idea there's lots to think about.

Edited by Tricksy

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Spread bets are short term bets.

If you have a long term bullish outlook on the banks you probably want to take delivery of the shares so you wont get shaken out.

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This is my plan.

This government won't let the banks go bust. Bank shares are still low. I'm thinking to buy the banks using the spread betting system. I already have an account with IG.

So the banks will continue to climb. This would involve leaving the bets running for several months.

I believe the bets auto stop at weekends, but just restart them on Monday, with some loss due to the spread. I know I have to get a roll-over set-up for each evening or the bets will auto stop daily.

Any comments. Is there a better way to do this, etc.?

Any advice welcome and thanks,

Nick

If you had come up with this idea a few months ago I would have agreed with you, however I think the value is now gone and the reality is you're betting on the banks and therefore betting on the country being out of the woods. I think we are anything but out of the woods. Barclays were 50p ish and RBS 15 p ish from memory , might have been value then for a long hold

Take a good look at the prices for the shares you are thinking of buying and ask yourself seriously... is the crash over ?

edit info and clarity

Edited by Markie6

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Hey guys, thanks for some interesting and educational replies.

I'll hang on to my money for the time being and continue to monitor things.

I think the tip for long term investment using shares was useful.

Thanks again,

Nick

PS, from a STR situation, I have 100k that I feel is just lying around losing value.

At present, I don't think anyone has a definite idea what to do with sums like these. The whole situation is still unstable.

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If you had come up with this idea a few months ago I would have agreed with you, however I think the value is now gone and the reality is you're betting on the banks and therefore betting on the country being out of the woods. I think we are anything but out of the woods. Barclays were 50p ish and RBS 15 p ish from memory , might have been value then for a long hold

Take a good look at the prices for the shares you are thinking of buying and ask yourself seriously... is the crash over ?

edit info and clarity

Yeah. I recently cashed in a juicy capital gain on LLOY - bought at (IIRC) 53p and 38p or somesuch, sold at 104p.

On the way down I did something similar: bought at 150, sold at 192. For a couple of weeks after I sold they were above 200, before plunging new depths. So I missed the top, but did a lot better than holding on too long. I'm expecting the same this time. Next serious round of bearishness could be a buying opportunity, but (other things being equal) I'll be looking for around 25% below the price I last sold at.

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