How well do you know your local bank?Here are the share prices of three UK banks, starting from January 2007 to earlier this week. Can you put a name to each share price?
You can find the answer by clicking on the comments link just below this post.
28 comments:
Bank A = Bradford and Bingley
Bank B = Paragon
Bank C = Alliance and Leicester
How did everyone do?
alice
It wasn't too hard to spot Paragon
Paragon was flat after today's announcement. I think it has hit bottom. The only way is up!
I got as far as "It's none of the biggies"... though I should have recognised Paragon.. I guess... and with hindsight, B&B is fairly recognisable from their recent sudden drop.
Among "real" banks, RBS & Barclays mirror each other and are down most (about 70%); Lloyds TSB are doing better - but still suffering (down ~30%) and HSBC are down an amazingly small ~10%! They're all doing better than the basket-cases you chose... but RBS and Barclays are not doing all that much better than A&L...
If there is any interest in this parlour game I will run it again with some of the biggies.
We will see how much interest it generates.
I was shocked by the losses, myself.
Alice
B&B was easy to spot. The big drop this week gave it away.
Dare I say it, the share price is down, buy low, sell high.
Now it is a good time to buy.
I'd be interested to see results for the "biggies".
Alice, the losses in share price at all the major banks - not just those operating in the UK - are all very relevant. This has been a global event. If you want to push this idea in an interesting direction, I'd be interested to see comparison of banks by their primary markets. HSBC, for example, focusing to a large extent on Asia with RBS/Barclays focusing on the UK. It is worth noting that RBS is talking about having to sell its insurance arm - and Barclays appears to be forced to do a hatchet job on it's acquisition of ABN Amero. If I were a shareholder I'd be asking some had questions - such as "Is Bob Diamond really worth £16m/anm if he makes short-sighted decisions like this that destroy shareholder value so abruptly?"
London EA... Did you give that advice on Northern Rock shares too? LOL! Sell high? I don't think so... you're stuck in a bubble mentality. Buy Paragon - and, if you're lucky, only suffer small losses until you die. Or... maybe I should be more optimistic... I've got some great shares in a privately held start-up, if you're interested. Minimum buy-in £100K. Now is a good time to buy - while there are no profits and no-one else sees it as a viable investment. Go for it! ;)
Asteve - what, you don't think you can't make money on buying Paragon? It looks oversold to me. If I had to choose between the Bradford and Paragon, I would go with Paragon any day. Why - they reacted quicker to the credit crunch and organized a rights issue, they are probably better capitalized. They also know their product - BTL - better than any of these other johnny-come-latelys.
Er, was that a double negative on-purpose?
I think Paragon has an odious business model; I think it is utterly dependent on credit - not only its own, but that of the market as a whole, in order to remain a viable (if unpalatable) proposition.
We've turned from a bull market to a bear market. Participants are now far more likely to be judgemental... and if I were a judge, I'd condemn the directors of Paragon and B&B alike for fraud and treason... not just sell their shares and refuse to pay for their "services".
You can make money as a pick-pocket... that doesn't make it ethical or a viable business strategy. If you want to gamble on Paragon, be my guest... remember to pick up some scratch cards while you're at it.
Paragon aren't arms dealers, they are just providing loans, and allowing investors to buy and develop property to make a profit.
There is nothing unethical about that.
What are you taking about?
Did a bit of work on this here, back in September - when credit-rating was pretty much dictating relative bank share prices, as one might expect ...
That is (almost) *exactly* what I'm on about. Impaired credit lending is about exploitation of an under-educated demographic for financial gain - perpetuating their poverty; BTL lending is about exploiting the greed of the relatively affluent to encourage them to attempt to exploit those less affluent than they think they are... again about calculation and misrepresentation to maximise short term profit.
I think that the fallout for civilisation of "just providing loans and allowing investors to buy and develop property to make a profit" is *exactly* what is unethical.
Poverty kills more people than do weapons sold by arms dealers - and the impact on humanity of debt is way in excess of the impact of armed combat.
I see far more honesty on the part of the weapons dealer... the two are only comparable when you note that much finance for armaments is by the issue of sovereign debt. Other than in this respect, the two are incomparable in scale of wrong doing.
"Poverty kills more people than do weapons sold by arms dealers - and the impact on humanity of debt is way in excess of the impact of armed combat."
I am sure the people in the Congo, Darfur, or Sierra Leone would agree.
Such nonsense!!!!!!!!!!!!!!!!!
"Such nonsense!!!!!!!!!!!!!!!!!"
If you say so. I find it interesting that it was you who chose to compare Paragon with an arms dealer - not me. I just said that they had a business model that is both odious and risky. They do - irrespective of the assumed ethics of arms dealers.
The arms dealer, at least, has an essential risk-free business as long as there is hatred. I also doubt they promote their products as victimless. There is no need for deception or widespread easy credit - far less business model risk.
Incidentally, have you ever wondered what proportion of armed combat is motivated by assumed financial necessity and the pursuit of wealth?
A&L own cahoot don't they? Looks like I might want to give that a little thought and spread my money around more.
While it's nice to argue that Paragon are immoral and making money off the backs of the poor, the real loss-takers in this episode are going to be the lenders, not the borrowers. If you're a subprime borrower, you probably have a job where a bankruptcy on your resume doesn't affect your career.
Nick
Good chart, but much more fun is predicting which banks are going to raise how much from rights issues!
My money's on Barclays and A&L being next, and possibly Lloyds TSB.
Nick, I'm a little disappointed that I allowed myself to be drawn further on ethics... but I'm hesitant to accept that a career is the be all and end all to life. For typical subprime borrowers, I think it is pretty clear that their career isn't their only life-focus. The real victims, I'd argue, are those who have been priced out of markets for years by reckless lenders who misrepresent their "products" to uninformed inevitable eventual defaulters... and, in doing so, simultaneously defraud investors who finance such practices.
It should come as no surprise that "what goes around, comes around" - and exploitation is seldom perpetuated for generations. Focusing on individuals - saying that their lives have not been destroyed - only hampered - is hardly, I feel, the most considered of endorsements.
If Paragon survive it will not be because they have a solid and honest business... it will be because they can stomach being more ruthless than others.
Back on the banks... HBOS are also interesting... down over 50% in the same time scale... and in the last few days below their Mar-20'th low that sparked the FSA investigation into "short selling" and "market abuse" - as well as unprecedented supportive public comments by the BoE and FSA to the media. I'm looking forwards to the FSA unveiling their "surprising revelation" about the short trading - which, I understand, will be published by the month-end.
Asteve,
I'm as morally righteous and judgemental as the next guy but I think when we discuss the housing bubble EVERYBODY who participated was acting immorally in some respect - usually due to greed or fear.
Thus I feel unusually misanthropic about the whole episode and whenever I hear a sob story it fails to penetrate the cold hard rock my heart has become in all matters real estate.
I agree the real victims are the bubble-sitters who didn't get involved and thus lost about ten years' worth of time they could've otherwise had living in their own home rather than a rental.
I was one of them. I hope the subsequent overshoot on the crash let's me get a little payback. But then again, that's greed talking.
Nick
I'm a little more forgiving. I can understand why most have acted as they have... and can forgive those who acted out of fear, greed, envy etc. though I see no reason they should be rewarded.
Karma in action - better late than never. :)
[Apologies... seriously off topic...]
Nick, I've just read:
http://hsgac.senate.gov/public/_files/052008Masters.pdf
that you referenced on another thread. Absolutely fascinating! Where did you find it? It suggests a very interesting investment strategy... if the data it presents is really the whole picture.
Asteve,
Just from my notes when I prepared the presentation for my boss before he attended the hearing.
Joking. Obviously.
somebody linked it at Calculated Risk in the comment section. I thought it was great too
Nick
Hmmm - as I said, fascinating article... I wonder if it was intended for publication. ;)
On another off-topic note... there really should be some sort of web-site that allows aggregation of such gems... Blogs are OK, but I can't see myself reading "Calculated Risk" for the occasional nugget that coincides with my interests.
On-topic again..
Among the "biggies" -consider also UBS... having decided to jointly underwrite the Bradford & Bingley "rights issue" with Citi - they now realise they're broke too... and must do a big one of their own!
http://uk.reuters.com/article/innovationNews/idUKL2246173120080522
http://business.timesonline.co.uk/tol/business/markets/article3965368.ece
News like this makes me want to crack-up and then crack-open a bottle of Lidl Cava. ;)
Are we going to play Name that Bank again? I do hope so.
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Could you please repeat this game with the Housebuilder stocks? That would be good for a laugh!
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