Barbecue of the shorters

An ongoing complete shocker continues for those who have continued to advocate shorting Australia's banks.

There has been a long-held theory from bearish commentators that in order to effectively short the Australian property market, 'investors' should instead short the major banks.

How has that played out? Well, in a nutshell, it could barely have gone any worse.

Commonwealth Bank (CBA) hit a record high share price today of $73.86.

Since the recently renewed call to short the banks, CBA's share price is up nearly 8% this month and almost 20% this year alone. The stock valuation has continued an astonishing trend, tripling in price since a low of around $24 during the global financial crisis.

Not only have the banks continued to deliver outstanding dividends, the capital growth has been electric too.

Even at today's elevated share prices, with a market cap of nearly $120 billion, the bank is delivering a dividend yield of close to 5%.

But as I discussed in a recent post, there is not much defensive value in the banks at these prices for new investors.

And, for those trading the stock rather than holding for the long haul, market signals from Japan (the Nikkei being on a miserable losing streak) are concerning.

Source: ASX

[Disc: I'm a long-term holder of CBA and two other major banks]

No comments:

Post a Comment