Private Investor: Now's the time to buy some bank shares

Fortune favours the brave, they say. So I have finally decided that it's safe to buy more shares in the banks I hold. I have topped up my holding in Royal Bank of Scotland and in Barclays.

Only a bit, though, as there are obvious uncertainties attached to the whole sector and to these two in particular. However, I am encouraged to think that the worst of the credit crisis may even be over. Well, not that far off it anyhow. And if it really is going to get worse before it gets better, perhaps it isn't going to get that much worse that quickly.

Generally you should try to introduce some sort of intelligence to timing your investments, I always think. Now, it seems to me, is the time to drop the miners and buy into the banks. Yes, even though I have cautioned against doing so in the past. The last banking shares I bought before last week's little incursions were in fact Northern Rock, which had to be dropped a few weeks later at a loss – but not as large a loss as might have transpired had I hung on (ie a total write off).

Anyway, times have changed for the banks. As I say, I doubt they're at the precise nadir of their fortunes, but you can never buy exactly at the bottom. All you can do is roughly sense when things may be overdone, when shares have overshot on the downside and act as best you can.

So this is what I have done, and this is why. Banks have probably overwritten their losses so far, which may compensate for their future losses. The analysts have very possibly become over-pessimistic about the banks' prospects. The gossipers have done their damage by spreading malicious rumours about the imminent collapse of certain High Street names, which are still trading as far as I can see. And the Bank of England and the other central banks have worked out what they need to do to stop things getting any worse.

The failure of Bear Stearns was a salutary lesson for all the world's central banks. That doesn't mean they're simply going to prop banks up; it does mean that they're taking the right steps to ease the credit crisis and let the banks get on with their job. After all, banks are in business to lend money and make money from lending money. I don't believe they actually enjoy not lending money to people and companies.

The next top-up will be my taking up of my heavily discounted rights in RBS shares. No sign of a Barclays rights offer yet, but you never know.

Even more bravely, perhaps, I've been adding to my long-term core holding in Savills, the posh estate agents. My investment in this company has now been through an entire cycle, and I'm still ahead on it. Now, at or close to the bottom of the property market ought to be the time when the shares are cheapest.

Savills is suffering from the decline in demand for top-end London property, and the reduction in transactions volumes. Yet the UK residential property game represents only about a fifth of Savills' business. The rest is a mixture of Asia, wealth management and America. OK, the last one is not such an encouraging place to be, but you take my point about its diversification. So Savills has been a buy as well.

However, my reserves of bravery are fairly limited, so the bulk of my money last week went into Northumbrian Water. This is about as dull a sounding stock as you can get – which is good these days. Providing water and sewerage services to the people of Durham, Essex and Suffolk is about as steady as it gets. Regulation and a close public eye on prices and charges complete the boring picture.

Did I say boring? Well, recently they said that trading "had been in line with expectations" which doesn't get the pulse racing, but that means they saw a surge in profits of 17 per cent.

So some people can make money in a downturn. Maybe for that reason the utilities have been everyone's favourite takeover stock, on and off, for about two decades – in fact ever since they were all sold off by the Thatcher and Major governments. Now Northumbrian Water has fabulous rarity value as one of the very few left out there that are still quoted on the London stock exchange.

So with Northumbrian Water, and my other favourite utility, Scottish and Southern Energy, you get plenty of defensive strength but plenty of speculative interest in there as well. Utilities will be the last firms to hit by the credit crunch. With a balanced portfolio of banks, property and utilities, you can't go wrong. Can you?