Was Selling Barclays PLC (ADR) (BCS) and Lloyds Banking Group PLC (ADR) (LYG) My Biggest Ever Mistake?

LLOY? LOL!
Unfortunately for me, there is still plenty to tempt investors. Lloyds boasts a 30% market share in traditional corporate and retail banking, which will be worth something when the recovery comes. Business disposals have boosted its underlying profits and slashed billions off its costs. Its balance sheet and core tier 1 ratio are getting stronger by the day. Even the EU ruling forcing it to sell 632 branches is likely to work in its favor, having little impact on profitability, while giving management one less thing to worry about. As the U.K. economy grinds back to growth over the next few years, I expect to see Lloyds rise ahead of the market. That’s good news for loyal, long-suffering investors, bad news for me.

BARC bites back
And you know the worst thing about all of this? I saw it coming. Even as I clicked the sell button, I sensed the big banks would enjoy the mother of all revivals. They aren’t only too big to fail, they are too street-wise. So why did I sell? It was partly for sensible investor reasons, primarily, that their sprawling balance sheets make them impossible to value properly. But the truth is, that doesn’t matter. If the U.K. is to recover, we need the big banks to lead the way. Politicians and central bankers know this, and tailor policy accordingly. You can’t keep a good banker down for long, let alone a bad one.

Mis-selling scandal
Over the past six months, Barclays is up 70%, Lloyds is up 62%. No other stock in my portfolio can match that. The worst thing is, there is plenty more to come. Plenty more volatility, yes, but plenty more growth, and eventually, plenty more dividends. So what have I learned from this? Firstly, the virtue of patience. I bought both stocks after the banking crisis, as a speculative punt. But I simply didn’t give them enough time. I can’t bear to buy them back at today’s prices. Banks are famed for their mis-selling scandals, but I have committed an expensive one of my own. As bank stocks continue their recovery, my punishment will last for years.

The article Was Selling Barclays and Lloyds Banking Group My Biggest Ever Mistake? originally appeared on Fool.com and is written by Harvey Jones.

Harvey doesn’t hold shares in any company mentioned in this article, and is very, very annoyed…

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