Surely this is the difference between Buffett-style value investing and a market that suffers from bipolar disorder.
Is HBOS insolvent? No. Is it illiquid? No. Is the market in the short-term wrong? Usually, yes.

Eddie Reader, birmingham, england

Thanks for a more balanced view.

HBOS was smart enough for not writing rubbish loans in H1 when Northerm Rock was undercutting them. That indicates level headed management that are prepared to think long term. HBOS should now be able to clean up the market.

The doom and gloom on HBOS is a bit over the top.

In lending terms, traditionally a "prime" mortgage with LTV less than 80% has been considered a much less riskier loan than either Credit Card (think Barclays) or Unsecured Personal Loans (think Lloyds). I don't see anything that changes that.

You can let someone take away your car or sofa but everyone needs a place to live.

Jack Chad, Reading, ENGLAND

I agree, I became an HBOS shareholder yesterday, for the first time: 7%+ yield with future divi growth certain from a string of well-known profitable brands is cheap beyond belief.

The "teenage scribblers" that dominate the financial markets nowadays have got their knickers in a twist. I think the sub-prime crisis has been engineered by a few shrewd operators who have made trillions out of it. Of course, there is a fall-out and inevitable hysteria from those that like to be noisy. Fact is is suits the UK banks who have long resented the foreign banks competing on their patch and in tightening criteria are sweeping all the profitable customers into their fold.

It is clear, at least to me, that there is a long-over due flight to quality and realism and in uncertain times people prefer to deal with reputable long established companies. HBOS will do very well out the uncertainty and to drag the share price down shows why there so much mediocrity in Britain today.

Michael Lever, Ledbury, GB

Pricing power means better margins and that is what is needed for any UK bank at the moment. Northern Rock grabbed a 20% share of the mortgage market by means of a business plan, largely based on pricing and fixed term rate marketing that was unsustainable to the point of recklessness. A competitor who is prepared to offer deals that are literally too good to be true does not benefit a market, it distorts it and so the fact that the FSA simply chose to look the other way while this was going on makes it all the more of a disgrace that its main board directors remain in office.

figurewizard, Hampshire, UK

As you say the dividend is well covered and the 18% increase is very attractive long term investers should ignore the daily price swings unless looking to buy. The history of shares is that you make far more money holding your shares and following a rising dividend than you do trying to capitialise on a constantly daily moving share price. I still have shares which I bought in the early part of the ninties the dividend on most has rises every year to date and the money has been used for reinvestment.

Dave, Mold, Flintshire