is now a good time to buy shares?

[magickingdom]

i give up on trying to figure out the irish banks, however the market is never/rarely wrong. right now the banks have no friends and the market see nothing good in the irish economy. as indiana says they have a dividend yield of 12% but they need liquidity big time so you can bet they may slosh that dividend in the next year. for punters its worth remembering that the two banks are now valued at e17b a fall of e45b from their peak. worst case sooner or later a bigger fish is going to buy them up and a few bob will be made

[blast05]

In addition to the 12% dividend for Bank of Ireland, they haven't screwed over shareholders who opted to invest their most recent divident to buy more BoI shares at €8.50 a pop. I done that a couple of months back to only get a letter about a week ago to explain that given that the share price had dropped to €5.50 (at the time) that they would not be re-investing dividends on behalf of shareholders and would instead be paying cash only. I don't see what was in it for them but i was well glad of it.
Can't understand their share price though. Their property assets are worth more than their market capitalisation never mind anything else about price earning ratios etc. In addition they have no exposure to sub-primes in the states and last year only 15 houses were re-possessed by the banks in this country, having increased to approx only 100 so far this year. The current price i feel has almost factored in the worst case scenario (and the central bank has already made soundings about making capital available to the banks) so am very tempted to buy a few more of them

[Bogball XV]

the likes of Student Loan companies or their ultimare parent companies would be worth an investment IMO

I think the UK govt own the student loan company

[Fear ón Srath Bán]

i give up on trying to figure out the irish banks, however the market is never/rarely wrong.

So, why have the shares fallen so low and so quickly? 

[magickingdom]

who says the shares are low fosb? last year is a different world and the current share price is supposed to be a derivative of all future earnings at todays prices. if the banks current p/e ratio (multiple of earnings in total share price) is something like 6 or 7 instead of 15 or 16 then the market see the banks profits probably falling by 50% in the next 12 months. thats what the market has priced in to todays share price. as for no exposure to us sub prime, the banks have huge exposure to property in ireland which is among the most overpriced in the world.

[Fear ón Srath Bán]

who says the shares are low fosb? last year is a different world and the current share price is supposed to be a derivative of all future earnings at todays prices. if the banks current p/e ratio (multiple of earnings in total share price) is something like 6 or 7 instead of 15 or 16 then the market see the banks profits probably falling by 50% in the next 12 months. thats what the market has priced in to todays share price. as for no exposure to us sub prime, the banks have huge exposure to property in ireland which is among the most overpriced in the world.

Overpriced by... the market mk! I'm simply of the belief that the market gets it horribly wrong more often than it doesn't, and the boom and bust cycles are testimony to that. Regardless of whether you think the banks' shares are now low or not, they are a great deal lower than they were a short time ago: so either the market was completly wrong then, or it is completely wrong now.

[magickingdom]

i take your point fear, i wasnt very clear when i said the market is never/rarely (insider information) wrong. what i was trying to say was that if you have boi shares and theyre quoted at 4.50 thats all your going to get overpriced/underpriced or not is another story..

[The Iceman]

the likes of Student Loan companies or their ultimare parent companies would be worth an investment IMO

I think the UK govt own the student loan company

Freddie Mac owns the Student loans in the U.S here

[Bogball XV]

I see that Sean Quinn has confirmed he's sitting on a paper loss of 1bn from his Anglo Irish shares, fortunately it's reckoned he had 4.7bn to start with.  Swings and roundabouts, 4 years ago they reckoned he worth a little over a billion, so he's done okay until now.

[muppet]

Very good but a bit long, scroll down to the bold for what I think is the interesting part.

http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4346962.ece

From The TimesJuly 17, 2008

The real reason why bankers feel so gloomy
We could be on the verge on the greatest slump of all time... if you ignore the encouraging economic figures Anatole Kaletsky
According to the overwhelming majority of financial analysts in the City of London and Wall Street, the world is now in the worst economic crisis since the 1930s. Anyone who doubted this cataclysmic consensus - and I must admit that I played down the credit crunch, describing it initially as a "storm in a teacup" - must surely be eating humble pie after the events of last weekend, when the two largest financial institutions in the world - Fannie Mae and Freddie Mac - teetered on the brink of bankruptcy, despite the US Government effectively guaranteeing their debts. The debts of these two US mortgage insurers come to about $5 trillion, equivalent to the combined national incomes of Britain and France.

If the US Government can no longer be trusted to meet its financial obligations with dollars that it can print on its own printing presses at will, then there really is no place to hide. That seemed to be the predominant view in the markets, reflected in a doubling of the cost of insuring the US Treasury's own bonds against default. In such conditions, the only rational course for savers and investors is to pull their money out of all banks or investment funds, whether in New York, London, Frankfurt, Hong Kong or Tokyo, and to put every spare penny into oil, gold or other commodities that might have some lasting value after paper money is totally debased, along with all shares, bonds, mortgages and other financial obligations based ultimately on nothing more substantial than elaborately printed paper signed by politicians and central bankers.

This is more or less what happened on Monday and Tuesday when stock markets around the world plunged in response to the US Treasury's seemingly unsuccessful attempts to restore confidence in its mortgage insurers, while oil hit a record high and gold jumped to within a few points of the all-time high that it had reached just before the rescue of Bear Stearns and Northern Rock.

But before you conclude that the sky really is falling in and that relatively optimistic commentators (including me) have been confounded, consider the following. In the past few weeks, US industrial production, consumer spending and trade figures have all come in much stronger than expected and now point unambiguously to accelerating economic growth, rather than a further slowdown. On Tuesday the Federal Reserve Board published a sharply upgraded estimate of 2008 growth. The near-recession growth range of 0.3 to 1.2 per cent predicted in April is now seen as a much more respectable 1.0 to 1.6 per cent. Even the gloomiest private economists on Wall Street now expect second-quarter GDP figures to show a strong recovery to growth of around 3 per cent.

Looking at the recent indicators, the clouds are now much darker over Britain and the eurozone than the US. The correction in housing, which has now been running for almost two years in America, started in Europe only a few months ago. The main effects of the slowdown, in terms of falling house prices, lost jobs and weak consumer spending, are only just starting to be felt in Europe - while in America the worst has probably passed. For Britain, the outlook is arguably even worse than for the rest of Europe because its economy is so dependent on financial services and housing, the sectors suffering the biggest hits.

Meanwhile, government spending, the only other sector of the British economy growing strongly until a year ago, is also bound to suffer a severe squeeze as the public finances go from bad to worse.

Having said all this, however, there is nothing even in the British figures to suggest a disaster on the scale expected by most City economists - or implied by the recent collapse of shares in British banks.

What then is going on? There are two possible explanations for the total decoupling between the economic figures and the financial markets. The first is that investors are dispassionately analysing and forecasting the future, while economists such as myself and, more importantly, those at the Fed and the Bank of England, are indulging in wishful thinking, based on mechanistic projections from the recent past.

The second possibility is the polar opposite - that the financial markets are caught up in one of their periodic bouts of emotional, straight-line projections of recent losses. Looking at the perverse responses to economic news recently in the world's most important financial markets, it seems quite plausible that investors today are as blind to economic realities as they were in the dot-com bubble, the Enron panic and the sub-prime mortgage boom.

But there is another, structural, reason why financial expectations may be out of tune with reality - the "hyper-finance" revolution in the banking system.

To see what I mean consider the following example. In the old world before the arrival of "hyper-finance", if a family wanted a £100,000 mortgage, they would simply go to the Halifax and borrow £100,000. Now consider what happens in the new financial world. The family would borrow £100,000 from Northern Rock, which would sell £100,000 of bonds to hedge funds, which buy these with £100,000 borrowed from Bear Stearns, their prime broker, which would raise this money by selling £100,000 of commercial paper to Citibank, which would then borrow £100,000 through the inter-bank market from Halifax.

So now the original £100,000 mortgage transaction has created £500,000 of new debts.

In principle, this entire chain of transactions could be squeezed, like a concertina, back to the original £100,000 transaction between the householder and Halifax, reducing the total amount of credit in the banking system by 80 per cent. This huge reduction in credit would do no great harm either to the homeowner or the ultimate lender, but eliminating all those intermediate transactions would devastate jobs and profits within the banks.

The upshot is that the main people suffering pay cuts and job losses in the present crisis are bankers, rather than industrial workers as in previous slowdowns.

Not surprisingly, this gives financiers a jaundiced view of the world. Nobody can say for sure whether financiers or economists will turn out to be right about the present crisis. Past experience suggests that financial market expectations are usually wrong at or near-cyclical turning points. It is always possible, of course, that the present financial panic really will be different from every other and will trigger the greatest economic crisis of all time.

But as they say in the markets, the four most expensive words in the English language are "this time is different".

[the Deel Rover]

looks like it was one of the worst days ever in the history of irish shares , irish banks took a hammering with anglo dropping 48% 
Brian lenehin had to come out this morning and guarantee the safety of the deposits of the  6 major irish banks for 2 years

reland guarantees all bank deposits
The Associated PressPublished: September 30, 2008

   

DUBLIN, Ireland: Ireland issued a sweeping guarantee Tuesday to all deposits in the country's banks in a bid to stop an unprecedented stock-market run against the Irish financial sector.

Finance Minister Brian Lenihan said all deposits in Ireland's six locally registered banks would be guaranteed by the taxpayer in the event that any failed.

The banks are Allied Irish Banks, Bank of Ireland, Anglo-Irish Bank Corp., Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.

The step raised a week-old government promise to insure the first €100,000 (US$145,000) in deposits. It followed Monday's record-setting 12.7 percent drop in the Irish Stock Exchange — and rumors that millionaire depositors were withdrawing funds from Dublin-based banks because the government protection was inadequate.

Tuesday's guarantee also applies to all of a bank's own loans and debts, so if the bank cannot pay its creditors, the taxpayer would cover the bill.


"This very important initiative by the government is designed to safeguard the Irish financial system and to remedy a serious disturbance in the economy caused by the recent turmoil in the international financial markets," Lenihan said in a statement.

Lenihan said the guarantee would be valid until at least Sept. 28, 2010. He said the government-backed insurance was "being provided at a charge to the institutions concerned and will be subject to specific terms and conditions so that the taxpayers' interest can be protected." He declined to detail the charges.

Monday's 481-point drop to 3,304 shattered the previous worst day in Irish trading: Oct. 28, 1987, when the Dublin market fell 8.8 percent in the wake of Black Monday.

Ireland's market has been among the worst performers in Europe over the past year because it is heavily weighted in favor of financial stocks. As of Monday the index had lost 72 percent of its value since reaching its record high of 11,815 17 months ago.

The big four financial stocks in Ireland were hit the worst Monday: Allied Irish Banks PLC, down 16.7 percent to €5.00 (US$7.20); Bank of Ireland, down 17.8 percent to €3.37 (US$4.85); the top mortgage provider, Irish Life & Permanent PLC, down 38 percent to €3.57 (US$5.14); and niche corporate lender Anglo-Irish Bank Corp., down 46 percent to €2.30 (US$3.31).

Ireland's financial sector has yet to suffer the kind of government bailouts or fire-sale takeovers experienced in Britain and the U.S., its major two trading partners. But analysts said the plummeting value of Irish banks was raising fears about growing bad loans in their own books, and could make them candidates for takeover or insolvency.

[Donagh]

Holy feck!!! You Free Staters better start praying non of the banks go under. With a E7 billion hole already in this years finances, this could brakrupt the place for a decade.

[the Deel Rover]

think i'll have to change the title of this thread to will it ever be a good time to buy shares again

[orangeman]

think i'll have to change the title of this thread to will it ever be a good time to buy shares again

Surely the bottom is nigh and when the banks shares have been diluted by the rights issues and part nationalisation, surely then it's time to go back in again.

[ludermor]

I see that Sean Quinn has confirmed he's sitting on a paper loss of 1bn from his Anglo Irish shares, fortunately it's reckoned he had 4.7bn to start with.  Swings and roundabouts, 4 years ago they reckoned he worth a little over a billion, so he's done okay until now.

What has quinn lost now?