“Clients don’t like us owning bank shares”. I was slightly taken aback by this comment made during a panel discussion at asset manager Jupiter’s annual investment dinner this week.

Apparently, clients would prefer their fund managers to invest in more stable brands such as drinks giant Diageo. These companies are deemed more reliable and less risky than the beleaguered banks.

But as the Jupiter manager pointed out, these so-called ‘safer’ stocks today come at quite a price. Everyone wants a piece of the pie so it comes down to simple economics – the higher the demand, the higher the price.

One of the first things newbie investors are told is the higher the risk you take, the higher the potential return. All investors accept a degree of risk. How does the cliché go? There’s no such thing as a risk free investment…

Of course, the amount of risk you take very much depends on your time horizon and why you’re investing in the first place.

But those investing for the long-term – two years or more, say – should not necessarily be spooked by negative news stories and sudden share price drops.

Take Barclays, RBS and Lloyds for example. All three of these major UK banks have been hit with their fair share of scandal of late. Last year’s Liborgate in particular sent their share prices plummeting; Barclays dropped more than 17% at one point last June.

However, looking at the share price of the banks at three different time periods – as at market close this time last year, in August 2012 and as of yesterday – provides an alternate view. Share prices may have fallen last summer, but people who bought bank stocks in February and held on through those tough months will now be sitting on a profit, illustrated nicely in the table below.

While all three stocks are a long way off from their highs before the global financial took grip in 2008 – on the 15th February 2008 Barclays stock was priced at 427.50, Lloyds at 386.10 and RBS 3,421.95 – it is important to remember that the market is a very different beast compared to then.

According to execution-only brokers TD Direct Investing, bank stocks continue to remain popular among clients and Lloyds Banking Group is the most popular equity holding among their ISA investors, with Barclays also featuring in the top ten ISA equity holdings in 2012 and today.

The golden rule is to remember that stock market investment is not without its risk and stocks can go up as well as down. But jumping ship at the first sight of a storm could be the riskiest decision an investor makes.