I think the whole banking sector in this country is horribly overvalued. Just look at Bank of Queensland. 20 times earning's for a regional bank?
What I also cant fathom is why we all think it's so normal. Our bank valuations are an outlier when compared to banks in other developed countries. 20% back-to-back returns in the US has generated outright euphoria and money is flowing into index and managed funds and asset prices are blowing bigger and bigger stretching valuations. Valuations in Australia are growing massive because our banks cant grow EPS.
The underlying economy these banks operate in is sluggish and the earnings growth is flat to minimal. Its almost as if people think we are in a post correction/recession world. Because if there is a recession or market correction, CBA could get wrecked from this high cliff. But there doesn't seem to be any hedging or caution to the wind. To me, investing in CBA at these prices is akin to driving a car without insurance - you've decided nothing can wrong.
CBA Price at posting:
$160.61 Sentiment: Sell Disclosure: Not Held
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