9 months into 2020 and I finally did something. No, I haven't sold Plus 500 (though maybe I should - I was looking for £10 when I bought and it's currently north of £14) but instead put a modest sum into Barclays at £1.11. Because obviously I have such a good history of investing in bank shares.
So, why Barclays?
- Bank shares on the whole look cheap. Obviously there are reasons for that - Coronavirus, Brexit, etc... But current economic forecasts should already be built into the banks' impairment charges, and they're still trading at a fraction of net tangible asset value.
- I was looking at Lloyds, but they are just so focused on the UK market they make me a bit nervous. Barclays are more diversified geographically and by sector. And they also trade at a bigger discount to net tangible asset vs Lloyds.
What I'm expecting:
- Bad news, impairments, decline in net asset value, no dividends for a while. Probably a few nasty surprises I haven't thought of. On the whole not a lot to look forward to - that's why they're cheap.
What I'm not expecting:
- Anything catastrophic/sudden enough that they'd need to raise capital.
In a couple of years hopefully we'll be back to some kind of normality and Barclays shares will trade closer to book - say, £2.50 or so.
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