All posts by Barry Mercer

Trading

I’m getting increasingly more worried about the market as each day passes. Something doesn’t “feel right” about this any more. Most of my shares are drifting downwards. Not tanking, just a steady drift… I think I’ll bail out of most of them at somepoint this week. It feels a little strange. Hard to explain, nothing seems to make sense anymore

Definitely selling MER and WMH anyway, may keep BOK for a bit, they seems to be doing ok. As are ALT and AEX. Perhaps go a bit more conservative, or admit I’m gold bug and pile it into an ETF… WMH had a bit of a rally when they released their results. Lots of people taking profit from them now and they are certainly in a down channel. Same with MER, they seems to drop in Oct for some reason!

Trading Dairy

Quick update,

Bought some shares in a mining company, Sunkar Resources. They have a large phosphate deposit in Kazakhstan which was previously mined by the USSR. Currently it’s being developed to provide fertiliser. So far, they’ve doubled in price from when I first bought them, and hopefully will continue on upwards as more positive news comes out.

WMH are doing rather poorly, I’d have thought more people would be gambling in a recession, seems a few large places have shorts on them though. Hmm.

Not investment advice!

Trading

I’ve started trading shares now. I’ve been following Robbie Burn’s excelent blog and commentary over at the Naked Trader, bought his book and have begun to take baby steps into the world of shares. I seem to be doing ok so far. I’m not sure if it is due to luck or judgement however. I suppose time will tell and the market will no doubt make a fool of me, as it has many others. Remember, the market can stay irrational longer than you can stay solvent!

Bradford and Bingley fraud

Bradford & Bingley, the nationalised mortgage lender, has laid bare the dire state of its loan book and said that a rising wave of fraud dragged it to a £160 million loss for the first half of the year.

The figures came the Council of Mortgage Lenders warned that the economy remained fragile and predicted that repossessions and arrears would continue to climb this year.

The CML has forecast that 65,000 people will lose their homes this year, up from 40,000 last year and just under 26,000 in 2007.

B&B, which was the UK’s largest lender to landlords before it was broken up and its mortgage book nationalised last September, said yesterday that 40 per cent of its mortgage book was in negative equity, up from 30 per cent at the end of 2008.

Impairments on bad loans ballooned from £75 million last summer to £328 million.

B&B has 60 per cent of its book in buy-to-let and 20 per cent in self-certified loans, sometimes called “liars’ loans” as borrowers did not have to provide proof of salary.

B&B, which flagged up a spike in fraud last year, warned that the trend was rising, and increased its provision by almost £100 million between January and June.

That brings the total provision for fraud and professional negligence to £271 million, a figure described by an industry insider as “extraordinary”.

As well as some customers apparently lying about their income, there is evidence of cases of property valuers and solicitors falsely inflating the value of properties, B&B said. Some of the fraud-related loss may be reclaimed on insurance policies, it added.

Customers falling more than three months behind on repayments rose to 5.88 per cent of the book, from 4.6 per cent at the year-end.

Richard Banks, a mortgage industry veteran who joined B&B as managing director three months ago, attempted to strike an optimistic note by echoing the sentiment of Lloyds last week that the worst was over. “Arrears appeared to have peaked and started to go down modestly in the past two months,” he said.

The Government sold B&B’s £21 billion of deposits to Spain’s Santander but could not find a buyer for its £41 billion mortgage portfolio and was forced to nationalise it.

Banks artificially pumping house prices?

I heard a rumour recently that banks were artificially pumping up house prices by using a shell company. The company contacts the defaultor on the mortgage, and offers to buy their property for an over inflated price. The bank gets the money, and if the house devalues, it will be off their balance sheet.

They have form, as this article regarding Northern Rock from the Telegraph proves.

“Other examples of a more cavalier approach to management also began to emerge. In March last year, he and other executives decided to book an extra £39m profit by selling an “insurance policy” – known technically as an interest rate swap – which was meant to protect the bank against rising interest rates and which could have lessened the effects of the worldwide credit crunch. In June, the bank set up a subsidiary called Kielder Property Management to buy its customers’ repossessed homes, potentially profiting from their woes. Others in the industry shied away from such practices.”

Makes you wonder where all the money from Quantitive Easing has been going doesn’t it? Also, wasn’t this the same type of thing that Enron were doing prior to their collapse.

Like I said, all a rumour…