Borrowing to buy BOI Shares????????

homer911

pocketdooz wrote: »

First off, apologies about the tone of my previous post. I shouldn't have been sarcastic. I just feel that from your post you are way out of your depth. You talk about not buying at 5.30, then they were 5.48 etc.etc. This either reads like someone who is joking or is not familiar with the topic.

Secondly, thanks for the compliment. If you read my original post I say . . . quote

"Bank of Ireland are a good LONG TERM investment at their present valuation. Long term is ambiguous though as it could be 2/3/5/10 years before we see a full turn around.

That's why it's called speculation. NEVER BORROW TO SPECULATE, YOU WILL GO BROKE "

My point was that they are a good LT investment BUT . . . this is a tricky time to be investing and it is not a good idea to put something as important as your kids savings (of €6000) into volatile shares like BOI. If you get Dublin airport bonds they pay over 6.5% guaranteed, Anglo has a savings account that pays 8% and AIB currently have a childrens savings account that pays 10% (there are obviously T&Cs with these) -

*** At these rates your kids savings will grow from €6000 to €25000 in 15 years (I dont know what age your kids are) . . . this is a secure investment. For BOI shares to show this level of return they would have to grow to €23 a share (never going to happen mate ! - not even at the height of the Celtic Tiger / Property boom did they get to these dizzying valuations.) ***

Options like these are a better idea in the current market in my opinion. Again, this is my opinion and you're perfectly entitles to tell me to go and ***** if you want. Either way, I hope it works out for your savings. All the best.

I dont know how you do your maths, but even at a 10% deposit rate with DIRT @ 20%, the best you could hope for on 6k is 19k after 15 years, including your original deposit.

Based on the current share price of €5, and lets say similar CGT of 20% with no indexation, and no stamp duty or brokerage fees (or allowances), if the price rose to about €18, this would produce a similar return. The decision you have to make is: Is the share price likely to hit €18 within the next 15 years? Even the most negative person would have to think yes!

rugbyman

I like the type of logic that appears here from time to time.Chump, you seem to have it.

I have my childrens money moved from the credit union to the bank awaiting my electronic command tomorrow morning. b of i were a few pence over 5 euro this evening.

One person asked how do we know its at its lowest? we dont.,obviously.

Buying bank shares in Ireland after such a fall is not overly risky. certainly not like backing a horse. if the day comes that boi or aib falls to nothing the country will have reached armaggedon. Irish banks saw the writing on the wall over a year ago and were busy drawing in their horns. Though thousands may be unemployed there are hundreds of thousands in secure jobs,still buying cars, and spending money. those who will suffer are those who took out too much credit and drew it from different sources. the dust will settle. Many fortunes will be made this year, by those with the money to cash in on those who bite the dust. liquidators will chase buyers with money and money will be king.

A poster last year pointed out that boi were always worth buying at 9 euro . three times that year they swung back to ten, but it would have been wise to sell whenever one saw profit. In any case though I agreed with that view, no really bad vibes were on the horizon . Obviously things are vastly different today.

Those who advocated deposits will indeed be safe, but there is no great upside.

to those who ask how long to keep them? 2/5/10 years. I dont know, my plan is to take profit when i see ourselves up 1,000 euro. the age old adage is to take your principal out and leave the profit in shares.

reading over this ,its perhaps a bit of a jumpy spiel, ,so, roll on the morn.

stepbar

I talk as an employee here.

I don't think we have seen the end of the fall just yet. Lending is tightening up big time. I know because I have direct experence of it. BOI will drop profit next year, you can be guarenteed that and impared loans will rise. However what remains to be seen is (and I'm very suprised that no one has talked about this yet) will BOI cut their dividend next year? Because we all know what effect that would have on the market if they did.

At present prices BOI shares would look like a steal (simply because of the dividend to price ratio). However on the face of it I'm not so sure. BOI's 3 main markets are Ireland, the UK and the US, all of which are in recession. A strategy of organic growth will only get you so far and won't get you very far in times of recession. Compare BOI to AIB and the markets they are in and you will soon find that perhaps AIB is the better long term buy. AIB has bought well in the Baltic states and has a good setup in Poland which is producing year on year growth. Probably needs to sell out of the US but perhaps now is the wrong time. On the other hand BOI hasn't had a major purchase in the last 10 years and sold crown jewels such as Bristol and West (I bet you their deposit book would come in handy now....) and Davy. BIAM is practically now non performing having been the top of the tree 5-6 odd years ago. The only thing that will save the BOI is the fact that they're probably one of the most conservative banks in the country. Trust me, if there's a bank to go bust first it won't be BOI. All in all I think the BOI shares have a small bit to go before the reach the bottom.

BTW, when the BOI share price hit 18eur back in Feb of last year I was advising my collegues to sell out and fast. I knew there was no way in hell the BOI could be valued as such. I just couldn't see where the value was TBH.


Final comment (To the OP): Don't be suprised if you don't get 20k because it wouldn't suprise me TBH. I borrowed 15k myself before things really tightened up and TBH I thought I wouldn't get it. I'm really thinking about putting it in BOI shares but not just yet. I might cash out of my options first and put the whole lot in at the lower price TBH. For me the main attraction is the dividend. Knowing what's happing on the inside I would have no concern for BOI TBH.

Minder

rugbyman wrote: »

One person asked how do we know its at its lowest? we dont.,obviously.

Buying bank shares in Ireland after such a fall is not overly risky.

Correct, we don't know that we have reached bottom. But what should be obvious is that the share price is continuing to fall. If you had pressed the button yesterday, your investment would be down 8.12% as I look this morning - that requires the shares to go up 10% for you to get your money back. Volatile it certainly is. Why not wait until they have stopped falling? How will you know? Because the price will be rising. You could take the view that you will wait for three consecutive days of rising prices and then buy.

Without any strategy regarding the entry and exit price, this is not investing, it's gambling. The only difference is, no-one knows how long the race is. Good luck!

Idu

Rumours this morning of BOI being in serious trouble. Heard it on a european news sqwuak too which rarely, if ever, covers Irish stocks

boomboombazza

janets_on_clubs wrote: »

Rumours this morning of BOI being in serious trouble. Heard it on a european news sqwuak too which rarely, if ever, covers Irish stocks

beat me to it:mad:


looks like you guys saved me a few quid. they are tanking today:eek:

randombar

Lads what are their stock name??

boomboombazza

punchestown wrote: »

If you have previously done well from investments, you should not need to be borrowing one big lump sum. The money being made from previous investments should be redistributed in other forms of investment (keeping the eggs from the one basket)

i have already said why i want to borrow for this investment . if you read the thread you would know this

punchestown

boomboombazza wrote: »

i have already said why i want to borrow for this investment . if you read the thread you would know this

Apologies, I gave up when I read this piece ; '
borrow 20k.
costs lets say 7k in interest(it wont cost this much will it?
thats 27k'

chump

rugbyman wrote: »

I like the type of logic that appears here from time to time.Chump, you seem to have it.

I think you caught the wrong end of my schtick :pac::D
I do not think ryanair is going to go bust, and versus other airline companies I view it as a well managed. I don't mean to say it's share price won't drop.

Irish banks on the other hand. :pac::D

I, for one, have no idea why anyone would buy the shares on a downward slope.
I'd much rather see a sustained market rally, with them following an upward trend. I'd wait until the worst is over, as they say, and then try to jump on. [but who wouldn't? ] - Point is I'd try not to catch a falling sword.

But I don't have the money or inclination to invest on the stock market anyway!
I get fairly obsessed with things I have no 'personal' interest in, I can only imagine how much of my life I'd waste if I had a serious wedge in a few stocks - never mind one!

Jivin Turkey

BOI currently trading at €4.51. Definitely buy now they can't go any lower

Minder

GaryCocs wrote: »

Lads what are their stock name??

Bank of Ireland ticker is BIR.IR if that's what you mean.

rugbyman

well, got them bought. fortunately there was a glitch on my first ever e banking transaction, so when I want ed to buy at 5.05 euro, I failed and got them cheaper. Another glitch meant I did not buy them at 4.39, but did buy at 4.51. They have risen twice since then(bought at 4 pm yesterday)., i am reluctant to make any comment, good or bad.

Idu

The FED announcing they would extend their borrowing facility has put a bit of a lift into the financial sector after the disasterous start to Tuesday after the rumours of Fannie Mae and Freddie Mac being in trouble on monday night so that would explain the rise in BOI stocks.

However if you listen to the forecasts from the BOI chief he has basically admitted that the banks earnings are going to start seriously suffering as more and more people default on loan repayments.

Best of luck with the shares anyway, wouldn't wish you to lose your money. It looks like it's gonna be a rocky road ahead though

edzillion

my 2¢:
Dont

pocketdooz

homer911 wrote: »

I dont know how you do your maths, but even at a 10% deposit rate with DIRT @ 20%, the best you could hope for on 6k is 19k after 15 years, including your original deposit.

Based on the current share price of €5, and lets say similar CGT of 20% with no indexation, and no stamp duty or brokerage fees (or allowances), if the price rose to about €18, this would produce a similar return. The decision you have to make is:Is the share price likely to hit €18 within the next 15 years? Even the most negative person would have to think yes!

I didn't start to calculate what it would be with taxation and dividends.

But besides that the maths are right - Also, your last assumption is very naive and shows that you don't really understand the topic. Why would the share price 'hit' €18 - what underlying logic do you have for this statement ? None, by the looks of things

Idu

My friend reckons BOI are back to the price they were pre celtic tiger boom. Anyone know if this is true or not? This guy would know his stuff with regards to Irish stocks

bosra

you are basically back at 97 or 98 price level..

Genco

I thought they were back to 94/95 levels but not 100% sure on that Just wish I had sold some of my now meagre holding last year

EDIT
Just caught roundup on us markets today and seems like financials took another battering today.

S&P Financial Index down by more than 5% at close
FNMA down 13%
FRE down 24% after selling 3 billion dollars of 2 year notes at 74 bps more than treasuries
Wachovia down 8% after Merrill Lynch reporting that WB losses could be up to 18 billion over next four years
Bank of America down 6% but regained half of that after hours after confiming they do not foresee any cut in dividend or need to raise capital.

Diarmuid

kmick wrote: »

My 25k quinnlife fund is losing 500 quid a day at the moment so Id steer clear. However you could probably make some money shorting bank stocks at the moment.

Good thing you didn't put it all into BOI shares then! Everything is going down now, that's the risk you take when investing in shares. However if you picked a well diversified fund with low cost your should be up in the long run. I don't know which Quinnlife fund you invested in but the Eurostoxx one would be my choice.

Diarmuid

rugbyman wrote: »

well, got them bought. fortunately there was a glitch on my first ever e banking transaction, so when I want ed to buy at 5.05 euro, I failed and got them cheaper. Another glitch meant I did not buy them at 4.39, but did buy at 4.51. They have risen twice since then(bought at 4 pm yesterday)., i am reluctant to make any comment, good or bad.

One question. If you figured it was a good idea to invest in shares, at a minimum why didn't you buy some ETF? As it stands you have no diversification! It's like putting your money on the roulette table on 12 instead of black. Both a risky but one is more risky than the other (likewise the return is greater on one, but it's your kids future you are risking)

rugbyman

My history of shares is one of loss. put 6 k on a basket of shares in 1987 and they flopped. NEVER came back. lost 50 % when i had to sell .

My reckoning is that Bank of Ireland,no science used, must have been close to their break up value. I dont know but I dont imagine that 5 % of their stock has been traded in the recent turmoil. I dont know about etf but will click on your post now.
Childrens future not at risk. the amount I have saved for them wont pay for accomodation for even one of them at college for one year. hopefully B of I might stretch that by another term. yesterday I could have sold the 4,500 euro bundle and banked 300 euro after trading costs, I did not, greed perhaps?
from what I can gather there will be a dividend this month.We will see.

Genco

BOI went ex div back at the end of May or thereabouts therefore you will not be getting any dividend on the shares you purchased the other day until they pay their interim dividend (IF ANY )

seventhwave

Intraday5 Dy1 Mo3 Mo6 Mo1 Yr2 Yr5 Yr
This was the outlook for BOI shares in the last 5 years that was obtained from http://www.sharewatch.com/platforms/site/index1206.php , it seems that there are worth less now than 5 years ago.

Oafley Jones

seventhwave wrote: »

Intraday5 Dy1 Mo3 Mo6 Mo1 Yr2 Yr5 Yr
This was the outlook for BOI shares in the last 5 years that was obtained from http://www.sharewatch.com/platforms/site/index1206.php , it seems that there are worth less now than 5 years ago.

Don't forget, there was a 2 for 1 share split in 2001.

woodseb

Oafley Jones wrote: »

Don't forget, there was a 2 for 1 share split in 2001.

that's been adjusted for

pocketdooz

Genco wrote: »

I thought they were back to 94/95 levels but not 100% sure on that Just wish I had sold some of my now meagre holding last year

EDIT
Just caught roundup on us markets today and seems like financials took another battering today.

S&P Financial Index down by more than 5% at close
FNMA down 13%
FRE down 24% after selling 3 billion dollars of 2 year notes at 74 bps more than treasuries
Wachovia down 8% after Merrill Lynch reporting that WB losses could be up to 18 billion over next four years
Bank of America down 6% but regained half of that after hours after confiming they do not foresee any cut in dividend or need to raise capital.

Bank of Ireland share ARE back at their 1993 levels

They have given everything back that was made during the Celtic Tiger years

Wollie

I haven't followed all the posts under this heading, but I don't think that the suggestion is as hare-brained as some are suggesting (although I still wouldn't reccomend it!). Firstly, on the maths, the Bank of Ireland's share price is now so low that the dividend on 10k worth of shares is higher than the interest cost of the borrowing. Therefore, if the share price in 5 years' time is exactly the same as it is now, our friend will have made money on his investment. He doesn't have to depend on the share price rising.

Arguably, it's even better. Even if the share price is lower in 5 years' time than it is now and if (a big IF) the Bank hasn't cut its dividend in the meantime, then he could (in theory at least) still be in clover, as he could roll over his loan for another few years, happy in the knowledge that the dividend was still more than covering his interest costs.

The problem however is that there is a risk that the bank will cut its dividend. Things would have to be very bad for it to do this - I don't know if the BOI has cut its dividend in living memory, but could be wrong. There are some who believe that things are very different today and that the Bank will have no option but to cut its dividend, which would undermine the entire optimistic argument set out above.

pocketdooz

Wollie wrote: »

I haven't followed all the posts under this heading, but I don't think that the suggestion is as hare-brained as some are suggesting (although I still wouldn't reccomend it!). Firstly, on the maths, the Bank of Ireland's share price is now so low that the dividend on 10k worth of shares is higher than the interest cost of the borrowing. Therefore, if the share price in 5 years' time is exactly the same as it is now, our friend will have made money on his investment. He doesn't have to depend on the share price rising.

Arguably, it's even better. Even if the share price is lower in 5 years' time than it is now and if (a big IF) the Bank hasn't cut its dividend in the meantime, then he could (in theory at least) still be in clover, as he could roll over his loan for another few years, happy in the knowledge that the dividend was still more than covering his interest costs.

The problem however is that there is a risk that the bank will cut its dividend. Things would have to be very bad for it to do this - I don't know if the BOI has cut its dividend in living memory, but could be wrong. There are some who believe that things are very different today and that the Bank will have no option but to cut its dividend, which would undermine the entire optimistic argument set out above.

Dividends on BOI shares very likely to be cut as earnings are down 25%

This will result in a further drop in share price

The cost of borrowing will increase as the ECB raises rates to combate very high food and energy inflation.

Therefore he will lose money on this proposition. In fact - if he did it last week when he intended to - his €20000 would now be worth about €17500 or so.

portomar

what if interest rates hit 8/10 percent? boi will tank and your loan will be much pricier than it is now. there are many of these possible outcomes, i wouldnt do it