Is my cynicism of bank shares still justified?

We live in a deeply cynical age, and the survivors are the ones who understand and embrace this lamentable fact. Never before has the phrase ‘ignorance is bliss’ been more dangerous; as standing still in your own blissful intellectual inertia runs a high risk of leading to your demise.

The original cynics date back to the days of the Roman Forum, when they displayed their discontent outside the forum by urinating in the street like dogs, hence ‘cynic’ from the Latin canis.

Yet we live in a world now where we pollute our own food chain – never mind the street – with steroids, antibiotics and even chlorine. So it is unsurprising that we have become immune to cynicism.

The prime example of this, of course, is banking – the only industry I can think of whose customers are more cynical than the businesses themselves; so cynical in fact that we are never surprised by another mis-selling ‘scandal’.

This in turn has become another cynical opportunity to gain through compensation – leading to the creation of an entire industry of what used to be known as ‘ambulance chasers’ flogging their ability to get better compensation for consumers, who are deemed to be too ignorant to do it themselves.

In search of compo

We’ve all had the unwanted and unsolicited ‘have you had an accident’ calls. So, after aeons of such approaches and being inveigled by all sorts of adverts and even celebrities – even the hitherto admired John Cleese in some ghastly daytime TV ad – I took some action.

During the ennui of this summer holiday I decided to amuse myself by seeing if I am entitled to payment protection insurance (PPI) mis-selling compensation.

By way of background, I haven’t had a credit card for years, but I do recall taking out a small loan from NatWest in the early 1990s to help pay for a house extension.

I had not the tiniest Scooby Doo (as the grandson would say) as to whether I had ever actually signed up for PPI.

I called the Financial Ombudsman Service and could not have spoken to a more charming and helpful young lady.

She sent me some forms, I filled them out and sent them to NatWest’s unfortunate owners, RBS (RBS).

My friend at the Ombudsman elevated my complaint to RBS, warning me that, as I had little recollection, had paid the loan off by 1995 at the latest and had put all attached documentation on the fire decades ago, it was unlikely I would be successful.

Being a cynic, of course, I had avoided that disappointment by anticipating it.

However, almost instantly I receive a text from RBS saying my complaint was received; then in a week a letter arrived, saying my complaint had been upheld and offering me a little over £800 in compensation, which, not unnaturally, I accepted immediately.

It arrived in my bank account within a few days and two weeks from the moment of my complaint.

Blinder, but why should I be so surprised that an organisation like RBS – so legendary for its cynicism – quickly admits fault and pays up?

Most of you know that I have grimly hung on to banking shares, including RBS, sometimes for far too long.

But could it now be possible the bad news is largely behind them? I don’t trust them; but I shall peruse the banking feature in this month’s issue with interest.

My mind turned towards the whole issue of trust, and shares that are particularly vulnerable to that emotion.

I ignored banks, because we all hate them. I ignored bookmakers, with whom I have done considerable business over the years on a trust basis, because they are in bad odour with the government over – among other things – fixed odds betting terminals, from which they make so much money.

Telecoms then? No, the likes of BT (BT.A) are basket cases right now. So how about some tech? Everyone loves their gizmos, and Apple (AAPL), for instance, really relies on the love and trust of its customers. Its products work well and are considered sexy.

The Nasdaq-listed shares, just above $100 12 months ago, had executed a tidy curve to above $160 by the end of August.

My stockbroker chum Mac the Stack tells me its third-quarter results were excellent, its share price is nine times its forecast for 2017/18, and growth shows no sign of letting up. So Apple gets my £800 – or RBS’s if you prefer – for this month. We’ll see how it goes.

Among other trust-dependent sectors, I looked at food, and one which came on the menu was the ubiquitous high street pie shop Greggs (GRG).

Wherever you go now, in almost any town and on almost every London high-street – particularly where there are pastry-loving builders – there is bound to be a Greggs bakery.

The share was on my radar before, a few years ago, but its outlets seem ever more ubiquitous; looking at the chart, the share has had a great few months and at the time of writing is up around 15% since July, to £11.90.

I thought therefore that I might garnish that particular offering with a little moolah, because you can’t be cynical about a sausage roll. TTFN.

This article was originally published in our sister magazine Money Observer. Click here to subscribe.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. 

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