A rest from stocks

I am having a bit of a rest from thinking about stocks and shares in August.

That is the beauty of being a long term investor. Occasionally you can just keep half an eye on the latest prices and not spend any time digging deeper. As long as you are invested in sound companies you can rest assured that they are not about to fall off a precipice financially speaking.

While I have been resting not much has changed. Banks have been bouncing around as normal and are still on ridiculous PE ratios. The news flow is still mainly bad.

Genzyme got a nice kick when Cramer recommended it. It is now showing a 30% gain over 18 months and is my biggest holding. I will not be selling. I still think that GENZ has an incredible risk reward ratio and is a great foundation for the rest of the portfolio.

I am still coveting Google, Apple and Oracle. These global brands all have a similarly great risk reward ratio and a fantastic balance sheet. They are stocks to be bought and not sold.

Happy holidays.

The chickens come home to roost

This time last year as the credit crunch was starting in earnest I was wondering what all the fuss was about. Now as the UK banks report their first half results the results of the dislocation are easy to see.

HBOS reported EPS down 52% when including various negative fair value adjustments to their assets. Not including these assets EPS was down 13% at 47p.

Using that 47p figure gives HBOS a 2008 PE of 3.5! And the directors guide for a stronger second half of 2008.

I believe that UK banks are very cheap here. Over the last four months I have been buying into Barclays and RBS on a monthly basis. My Barclays shares are now inching towards break even. The bottom may have been hit for the banks this summer.

It has been hard to keep buying banks when their price keeps falling and the news flow is terrible. However Warren Buffet's greatest investments were made by buying into companies that had suffered a temporary glitch such as GEICO when it almost went bankrupt in the 70s or Coke when it changed cola flavour in the 80s.

I believe this is a temporary glitch for the banks. The are making mountains of profit even now!

Lets review their position in 12 months time and see if I am right!