Northern Rock

[argonaut]

Should I take a counter intuitive punt on Northern Rock shares now that they have lost 32 percent of their value in one day? The company can't go bust now the B of E is supporting it.

I'm reading Richard Farleigh's book 100 Secret Strategies for Successful Investing. His basic premise is that one should ignore the herd instinct and cut against the grain of sentiment to find value. Is NR it?

[devolution]

There is one tip that my late Dad used to say to me about stocks:

"Only invest as much as you can afford to lose..."

A wise nugget that everyone should always remember -- applies to domains too!

[GWing]

I'm going to wait till monday to buy mine in Northern Rock, hopefully drop a little further.

It's a cracking deal, if the share price drops much further it will be a take over target and boom back up again.

There is nothing wrong with Northrn Rock, they are still in profit. Their only problem is that other banks have run out of money to lend them to fund new customers mortgages. Other banks have the problem not northern rock. Northern Rock has now had to pay a higher rate to borrow it's money from the BoE. Northern rock have a bad debt book of 0.5% which is miles better than most banks.

Some big earnings to be had here I feel.

[deconstruction]

shares closed today at about £4.38 today (drop of £2.01)

back in feb they were about £12 i think.

[accelerator]

Never catch a falling knife. People were buying all the way down from the high to today's price thinking they were cheap, and some of them will now have big loses. That said, contrarian tactics are a good idea, but you have to be sure it's really the bottom. IMO the upward trend will take a while to develop, so I will be waiting to see, but Northern Rock is said to be fundamentally sound, it pays a good dividend, so it has the potential of being a bargain, but like your Dad said, never invest more than you can afford to lose ... and don't put all your eggs in one basket.

DYOR

Rgds

Accelerator

[grandin]

They will be bought out cheap, but not yet....going concern businesses are easier to shift so recievers are more keen to let them continue...the loan will allow them to find a buyer... but prices need to be a little more keener for a buyer to emerge

Bank of England should not step in....not good long term as it gives lender too much room.....let them go under and that will give the right message...irresponsible lending indeed

Lee

[devolution]

Where do the Bank of England get <their> money from to loan?

[grandin]

Porn broker....they melt down the gold reserves and mould into a sexy loan

[Fold]

Originally Posted by argonaut

Should I take a counter intuitive punt on Northern Rock shares now that they have lost 32 percent of their value in one day?

The adage goes, returns are generated from "time in the market not timing the market".

[scooter]

Originally Posted by devolution

Where do the Bank of England get <their> money from to loan?

From us, the tax payer. All funds to government go to the bank of England. All spending from government comes from what we have put in. (taxes)

Northern Rock are sound. They have provided 1 in 5 mortgages in the UK for the last 8-10 years.

They will not go under. The Bank of England would not loan to them if they did not think they were financially viable. It is purely a cash flow problem. Their books are healthy but they need hard cash now and the other banks don't want to do business.

Did you see the news tonight? See the queues of people wanting their money out? Did you notice they were ALL pensioners? Pensioners/savings is not where they make their money from now, they make their money from long tem lending. (which ultimately means borrowing in the short tem)

If you invest now, it has to be for the long term, but I think in 3-5 years time you will be laughing all the way to the bank (although it might not be Northern Rocks )

.