financial services/ the new dotcom

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joe sod

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just wondering whether financial services is the new dotcom, many hot new companies were set up in the last few years to take advantage of all the cheap money and liquidity, are they destined for the same fate as the dotcom bust, last week a company in the IFSC folded, are there many more to follow and will it infect the wider financial sector like banking and insurance
 
Yes, it seems subprime is the latest in a long line of frauds perpetuated by lack of regulation of the industry. Dotcom, Savings & Loan, Junk Bonds all stem from the deregulatory revolution of Reaganomics. Note that Dotcom and S&L both led to recessions, what's the betting that Subprime does too?

Question - can anyone recommend a good summary of the various financial frauds over the years?
 
I know we don't discuss individual shares here but, looking at the Irish Banking shares, is anyone else getting a feeling Déjà vu that was last experienced during the dot com bubble.

I keep looking at them (AIB, BOI, IL&P, Anglo) and saying they can't go any lower, but they keep proving me wrong.

I wonder where the bottom is?


Murt
 
I think AIB, BOI etc are like the intels, ciscos, general electrics of the dotcom era. They were infected by the dotcom boom ad the bust but they were big enough and heavy enough to survive it, however it is the new financial companies trading in derivatives that will fold.
 
TO BUY OR NOT TO BUY IRISH BANKS.... THAT IS THE QUESTION:

The market appears to be pricing in a recession into the valuations of the Irish banks. I believe that it will be turbulent times until next March when the American banks will be releasing their full year results (which will be properly audited). At that stage the whole sub-prime mess will have played out and investors may gain their appetite again. We will have a rocky ride till then.

Sensible investors will wait... but I would like to take a punt on AIB at these levels.
 
I would still be very nervous about investing in any financial stock of any country. When you see the covered bond market in Europe dry up, it shows how difficult funding could become for financial institutions.
 
Invest said:
TO BUY OR NOT TO BUY IRISH BANKS.... THAT IS THE QUESTION:

The market appears to be pricing in a recession into the valuations of the Irish banks. I believe that it will be turbulent times until next March when the American banks will be releasing their full year results (which will be properly audited). At that stage the whole sub-prime mess will have played out and investors may gain their appetite again. We will have a rocky ride till then.

Sensible investors will wait... but I would like to take a punt on AIB at these levels.
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Really, you think sub-prime will be over by next March? I notice you don't say what year! What about ARMs, Alt-A, near-prime and jumbo? Their rates reset over the next three years.
mortgage resets
 
yoganmahew said:
Really, you think sub-prime will be over by next March? I notice you don't say what year! What about ARMs, Alt-A, near-prime and jumbo? Their rates reset over the next three years.
mortgage resets
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I agree. Anyone who thinks the effects of the sub prime crisis will be gone by the first quarter 2008 is fooling themselves. It will take 1-2 years if not more for the effects to be fully seen and worked out of the system.
 
Think I'll buy too if Mrs Firefly will open the purse. Worked for one of the big banks up until the last few months & feel it was in pretty good shape tbh.
 
Sunny said:
I agree. Anyone who thinks the effects of the sub prime crisis will be gone by the first quarter 2008 is fooling themselves. It will take 1-2 years if not more for the effects to be fully seen and worked out of the system.
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A sensible investor should be looking at the long term though not hoping to make a quick profit in a few months time based on what you point out is an optimistic hope things will be over in March. For a buy and hold investor investing for the long term 1-2 years is not long to wait if he/she truly believes these shares have been beaten down excessively and are now undervalued.
 
dam099 said:
A sensible investor should be looking at the long term though not hoping to make a quick profit in a few months time based on what you point out is an optimistic hope things will be over in March. For a buy and hold investor investing for the long term 1-2 years is not long to wait if he/she truly believes these shares have been beaten down excessively and are now undervalued.
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This is the same kind of stupid advice constantly trotted out on this site about buying a house and "what does it matter, what the price is as long as you can afford it and your in it longterm"

Of course it bloody matters, anyone with a brain in their head should be looking to buy at the bottom or as close to,not buying in on a downward spiral.

I ofter wonder do the "sensible investors" actually think about what they are actually advising people to do,why would anyone want to get in on unnecessary losses.
 
coolhandluke said:
This is the same kind of stupid advice constantly trotted out on this site about buying a house and "what does it matter, what the price is as long as you can afford it and your in it longterm"

Of course it bloody matters, anyone with a brain in their head should be looking to buy at the bottom or as close to,not buying in on a downward spiral.

I ofter wonder do the "sensible investors" actually think about what they are actually advising people to do,why would anyone want to get in on unnecessary losses.
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I actually said "if an investor truly believes these shares have been beaten down excessively and are now undervalued" then buy and hold might be an option, many obviously deserve to be falling in price and should be viewed with scepticism.

The point was being made that the effects of the sub-prime situation might be felt for longer than March, which is quite possible. Prices don't need to fall further for short term strategies to be a bad idea in this situation, if we were looking at a prolonged period of weakness where prices don't increase much if at all then short term speculators won't turn a profit.

However if you are of the view that some are now undervalued it could be the time to buy with a long term view. Obviously if you think it will fall further wait until it bottoms out to buy, that is a matter for every investor to decide for themselves if they believe in trying to time the market.
 
I read an article recently that irish life were about to outsource alot of their back office jobs, with the banks and other financial companies under pressure could this be what the bigger banks have in mind. It is reminisent of what happened after the dotcom collapse, the technology companies outsourced alot of their programming to india where they didn't have to pay the big salaries that were being payed after the high tech boom, now the financial services boom is over will these companies do likewise, an awful lot of banking is now computerised is this the chance for banks to offload alot of expensive workers that are not really needed now
 
coolhandluke said:
Of course it bloody matters, anyone with a brain in their head should be looking to buy at the bottom or as close to,not buying in on a downward spiral.
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As someone wiser than me recently pointed out, there isn't a bell that rings when the market has reached its lowest point!

Everyone would love to get in at the lowest point, or as close to it as possible, but only hindsight will tell if they are successful. If an investor believes that prices are lower than values, and that prices are likely to increase over time, then he should go ahead and invest, and if the price falls further before it rises again and he then makes a paper profit, he wasn't wrong! However, if short-term gain on share prices alone is the priority, it is likely that the stock-market is not the appropriate place to invest!
 
oopsbuddy said:
...If an investor believes that prices are lower than values, and that prices are likely to increase over time, then he should go ahead and invest...
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I've seen that opinion a lot in different places. I'd add onto this that the investor should also question the validity of his beliefs, make sure his beliefs arent flippant and based upon some infotainment article; and also accept the possibility of not only the best case but also the worst case occuring in advance of investing i.e walk into an investment with his eyes wide open. And try to see the difference between informed investing and blind gambling.
 
joe sod said:
just wondering whether financial services is the new dotcom, many hot new companies were set up in the last few years to take advantage of all the cheap money and liquidity, are they destined for the same fate as the dotcom bust, last week a company in the IFSC folded, are there many more to follow and will it infect the wider financial sector like banking and insurance
Click to expand...

I don't think they're comparable. The dot com crash was more of a death than a crash. The industry never recovered. The "online only" concept of doing business is only survived by the reliables such as banking, ticket sales etc. Remember in its height there was anything and everything.
 
contractor said:
I don't think they're comparable. The dot com crash was more of a death than a crash. The industry never recovered. The "online only" concept of doing business is only survived by the reliables such as banking, ticket sales etc. Remember in its height there was anything and everything.
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The only comparison I see thus far is falling share prices. The thing about the banks is they are real businesses which have been and continue to make real profits and which can afford to give dividends. Lots of those dot com firms were only worth something on paper and the paper was used to take over other firms which also had high valued paper and low profits. In fact some of those previously billion dollar dot com firms never made a profit ever. This paper value then quickly evaporated.
The question is therefore how much of a threat exists to bank profits in the future ? Or to the profits of bancassurance and insurers ?
 
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