Private Investor: Here's one banking giant I'll hang on to

Only a few days in and already the Footsie's started its ups and downs. Moves either way in the index of about 50 points may seem alarming, but what might once have been regarded as frightening levels of turbulence are much more calmly taken nowadays.

Mind you, I've learnt not to panic before, so what's happening doesn't necessarily presage much more stormy times ahead. Only fools predict where the Footsie will be in a year's time, and predictions, so one wiseacre writes in the Investors Chronicle, are immoral as well as unwise. Still, I'm reasonably optimistic, and take some comfort in the fact that almost all of the FTSE 100 index's movements can be accounted for by the fortunes of the mining companies.

It seems to me that if you had the nerve and the funds you could make quite a bit out of nipping in and out of some of these stocks - the likes of Kazakhmys say, or, more sensibly Rio Tinto or Billiton. They seem to have a pretty regular rhythm, but you wouldn't want to be holding great slugs of them when this particular game of financial musical chairs grinds to a halt.

As it happens, I'm more interested in selling shares, to fund a property purchase. Nothing speculative, you understand. You may take this as a "sell" signal on the UK residential property market, as my timing is usually fairly bad. The tricksy bit - and don't get me wrong, I'm not bragging - is that I don't want to sell too many shares where I'm sitting on a nice paper profit because if I flog too many of those I'll have to pay capital gains tax, like the big boys. So we have an interesting little fiscal twist here, an example of how the tax system can distort rational financial behaviour. Well, mostly rational in my case.

Thus, I'll be clearing out my own kennel of dog shares: Vivendi, On Line, Reuters, Telecom Plus and, most disappointingly, Smallbone, the posh kitchen fitters. More will follow. One share I'm happy to hang on to, complete with its little paper profit, is Royal Bank of Scotland.

I bought this a year ago and it hasn't really done much until now. It's been tipped by The Independent, no less, as a share to buy for 2007, and is the subject of a strong buy note from UBS, which describes RBS as the cheapest big banking group on the block.

Merrill Lynch also rate it as a buy, with a price target of 2,261p. The shares have crested the 2,000p mark, itself about 10 per cent up on where I managed to buy them and not far off its all-time high. The group seems to have improved its bad losses, in contrast to most UK banks, though I don't suppose it would be immune from a serious slowdown in the economy.

There again about half its earnings nowadays come from abroad, and things are improving across all of its business activities. It yields 3.7 per cent and it trades on the most modest ratio of its peers - mainly because it is not seen as a bid target in the way that Barclays, Alliance and Leicester and others periodically are. I'd like to hang on to RBS and maybe even add to it, no matter what happens.

It should prove as solid as its magnificent head office building in Edinburgh. I say that because work took me there over the festive season. A thought occurred to me as it must have done to you if you've ever traversed the vast wilderness that is so much of the UK. Why don't we just build all over it? Not the bits of special scientific interest or the areas of outstanding natural beauty. No one wants to see a Bovis estate on National Trust land. But it just seems to me that the likes of Migration Watch go on and on about "our overcrowded island." Only if you're sitting in the middle of London or Sheffield, I should think.

I know we're almost as densely populated, according to the stats as Holland or Hong Kong or something, but it's just that I would have thought you could double the size of say Ely or Peterborough or Carlisle and no one would much notice. No endangered species would die out and no one would miss the view.

Why have I taken this strange detour? Because I'm worried. I think it's great to get Polish plumbers and Bulgarian builders and Romanian spud pickers to come and do the jobs we can't or won't do. Trouble is it's yet another push on the housing market. So why don't we just get building to meet the demand? As a house buyer I'd like to see a much more sustainable, stable market. So would we all.

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