Thats one thing that also has surprised me. The yields on the 10-year US bond is a healthy 4.7%, its 4.5% here in Australia. This is better than even the grossed-up dividend yield of CBA which is currently 4.2%. I cannot comprehend how a dividend stock that hasn't grown EPS over a 10-year period can offer returns to investors less than the risk-free rate.
The narrative of a melt up is so strong investors are willing to hold & buy stocks despite crazy valuations that on face value are horrible from a risk-reward perspective.
Although the Santa rally never happened, volatility is increasing - more up and down swings in major indices. When will the risk senses kick in and investors start adjusting positions? Or are we still in a manic and euphoric phase where the trendline can continue to rise despite lack of earnings growth, pushing price multiples higher and dividends yields even lower?
At these prices, buying CBA is gambling.
CBA Price at posting:
$156.21 Sentiment: Sell Disclosure: Not Held
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