Member Info for LennyMac

Hope you find the board an interesting and informative place and good luck with your investments. I am interested to know why you are thinking of starting with RBS? On the plus, this is possibly as low as the sp will get so you'll have quite a bit of upside. On the minus, there are other, dividend- paying shares out there that aren't subject to the degree of volatility that RBS experiences, that will also show some price growth (try Inmarsat, a personal favourite!).

Yep, it is pretty disheartening. However, a share price, any share price, is only partly a reflection of market perception of the state of a company and partly an assessment of a whole lot of other factors of which the company itself might only be a small element. For example, if I was a large institutional investor, RBS is pretty unattractive unless I expected a substantial, sustained rise in the sp over a specific period: no div, state ownership, lots of internal issues as well as ongoing legal problems, and all the other things that we have mused about for months. Add to that the myriad other factors of which RBS cannot control but will be affected by: domestic and international political uncertainty, sluggish demand in Europe and China, oil price etc. Given that an institutional investor has a lot of alternative investment options, RBS is simply not worth the attention at the moment and cash goes where yields and potential upside is clearer. I am not particularly worried about the current sp, even at its somewhat anaemic level because I have seen that, given favourable market conditions and sentiment, it has a capacity to rise rapidly.

I think we may have discussed this before; I am not sure that you can ascribe the fall in the value of banking shares generally and RBS specifically, entirely to management and possibly 'Given that they have overseen it lose half of its value in under a year' is a bit harsh. I might for example argue that the fall in banking shares is due to concerns about sector- wide exposure to oil companies and that the correlation of the decline of bank shares and the oil price are not simply coincidental. As the oil price regains some of its losses, fears about exposure will diminish and, coupled with ongoing efforts for RBS to resolve legacy issues, the price ought to recover.

Whom. Who will be fooling whom. No, but seriously, I am smiling. Unfortunately bankings copping a bit of a hiding at the moment. On the upside, there might be a bit of opportunity to profit on the eventual swing upwards, and if I had some cash and a few nerves of titanium, I might. 320p still seems cheap!

Sad day for football

Or RBS is different to the other banks and the City hasn't placed much value on the state of the RBS recovery yet. That being said, it did hit 412p last year so there must be some underlying optimism.

Yep, a very thoughtful and comprehensive post; thanks for your time and effort. I suspected that consolidation and splitting were linked to the psychology of the intended markets but you've provided examples of the practical reasons why a company might also consider it.

Comrades, I'd like your assistance/ understanding/ speculation on a question I could not resolve for myself this weekend: Where is the benefit to a company in consolidating or splitting its shares? If there is supposedly no effect on price, why would a company undertake the accounting hassle? Presumably there are benefits and costs either way.

Could it be that their conditions of employment require them to hold a certain number of, or value of shares commensurate with their salary package and that what you have observed is merely a recalibration of their holdings to meet this requirement. I am sure I have read somewhere that this kind of arrangement is in place at other companies (perhaps it was Barclays?) for very senior management.

Fair enough. It is my pedantic streak I'm afraid, magnified by responding to posts too early in the morning with too much caffeine. I appreciate your good humour as always. I am probably better off applying myself to the TSCO board at that time of day, where the mood is a little more poisonous. To be honest, my opinions have no real basis in fact just observation, and RBS is a case in point that even when I am certain I understand, it will confound by doing something unexpected that doesn't fit the model.

Well, what are 'the basics' then? The current sp cannot simply be attributed to RBS' fundamentals. It seems to me that in fact, the financial position of RBS (allowances for scandals aside) has stabilised and there is a workable plan in place for disposing of the extraneous parts of the business in an orderly fashion, and this has been the case for the last 3 or 4 years. The year on year losses are simply nett accounting positions that reflect write- downs and the legacy of years of really poor behaviour, but there are actually considerable profits in the core parts of the business. We have seen that since 2008, the RBS sp has been subject as much to the general turbulence of the markets as to its somewhat precarious position as a 'state owned' bank. It is the same now: the current sp is where it is not because of any massive reversal in the bank's fundamentals but because of the confluence of a series of external factors that have spooked financial markets everywhere. Nims refers to sentiment and he (she?) is entirely right, but this has been the case for RBS all along, once the threat of break- up had passed. Surely it has been no surprise that when the FTSE contracts significantly for months, RBS falls further and longer than other banks, and more generally, other FTSE companies. When RBS hit 412p last year, this wasn't due to any particular significant improvement in RBS's outlook but entirely to the sentiment of the market. Until RBS is unshackled from state ownership and resumes dividends, we should expect that it will behave as a statistical outlier: falling hard and fast when the market drops and picking up gradually when the market appears to surge.

Surely we could infer that it is cheaper to do it that way rather than produce it in the UK? Businesses will quite obviously go for the optimal combination of inputs. I might also infer that perhaps the conditions for producing steel in the UK (eg wage levels, transport and other input costs, the quality, age and scale of the technology used to produce steel, possibly red tape)... all these things conspire to make UK steel less competitive. The government has two options: either accept that it is unlikely that the UK will be able to produce steel competitively and create the conditions to produce other things, or it tries to improve the internal commercial environment so that steel makers derive reductions in their costs of production, eg lower taxes and rates for steel producers, improved infrastructure (rail links, ports), support for development of engineering talent. The current state of the UK steel industry isn't crazy; it is simply the inevitable product of years of governmental neglect of these factors and underinvestment by the businesses themselves (although the government must also take some of that blame, for not incentivising UK steel producers to invest).

I agree with your sentiment; it is wrong that the behaviour of executives in private companies (like banks) and in public office (parliament, the BBC, the NHS) are not held properly to account. You'd think that governments would have an interest in pursuing justice, given the critical impact and cost of it. I hold no hope that the current government would seek any kind of redress because it is ideologically predisposed to supporting the 'establishment'. Perhaps the next government might do things differently. But therein lies the problem: we as consumers, voters or shareholders have very few avenues available to actively oppose the status quo and to advocate for change beyond small- scale protest. A march here, a petition there... I am not sure that people like Goodwin will ever be held to account.

Too much caffeine! Sorry for the pedantry.

I think we have to remember that none of these people have been tried because they haven't been deemed to have broken any law and there seems to be no willingness by government to create new laws that apply retrospectively. What these people have done might be morally or ethically wrong but not illegal. Companies (all companies, not just banks) invest serious time, effort and expertise in interpreting the law in order to work around it, factoring in the likely responses of regulators and watchdogs. It is evident that banking regulators applied very little scrutiny or oversight to the activities of banks before the 2008 crisis and with reference to the PPI and rate- rigging scandals, but where they have been able, steps have been taken to try to reverse the effects of these activities, eg making banks pay for PPI misselling.

Second hand. You have second hand anecdotal evidence if it comes from a friend.

I don't think the drop in sp that has occurred recently is entirely down to RBS as a company.

I did note the change in style and substance. Graftie: how about a recommendation on silver and gold at the moment?

Graftie, I think you are probably in your mid forties, black, and have a penchant for weeding out some good share trading deals. Perhaps at some stage you were in the army.

I guess if you take the view that most of the funds into which billions in pensions savings are invested contain the likes of BP and Shell, then there are important negative impacts that affect lots of people. I just can't see how the falling oil price is otherwise anything but a benefit. There are millions more out there who may be unaffected by changes to the stock market or pensions, but have more cash left over each week because generally, prices are not rising. House prices and rents are a different matter, only indirectly affected by the state of the stock market. These markets require intervention by government; different intervention. This government has done nothing to restrain house prices or rising rents , or create a viable market for those people who want to live in the properties they want to buy, but there is no correlation I can see with the price of oil.