The strong get stronger

Barclays released their 2008 results last week. And what a breath of fresh air they were! A bank making a profit - even after the write downs! EPS was 60p which puts Barclays on a PE of under 2!

Yes that is right. The PE of Barclays is under 2!

So if you have some money to save you can either get about 2% return in a savings account or you can get a 50% earnings yield if you buy BARC shares.

Is this the sort of mad Mr Market pricing that Warren Buffet loves to take advantage of?

Possibly but bank share prices have been dropping for so long it takes a strong conviction to start buying now.

Barclays are going to start paying dividends again in the second half of this year and this should give the share price a solid boost. They are going to start paying the dividends quarterly rather than twice yearly which will be better for income investors like me.

Barclays have been able to use their solvency to buy assets like Lehman Brothers at fire sale prices. This bodes well for the future when things eventually stabilise.

As for me, I am buying this one again while it stays below 200p. How often can you get a PE of 2 for a global multinational that is profitable and the government will not allow to collapse? Not that often is the answer!