No one can ever tell me this isn't a massive bubble in the making. All the evidence is there. CBA has been trading since 1991 and the current earnings multiple is 55% above its historical average from 1991-2023 (16 times earnings average/29 times current earnings = 55%). A drop of 45% brings CBA back into line with the multiple average from 1991-2023.
Does the 2.86% dividend yield not ring alarm bells among new entrants that CBA is overvalued on a massive scale?
Lithium in 2022 looked unbeatable, until it wasn't. You can find Pilbara and other lithium stocks trading at 50% discounts to the highs. 'But this time it will be different' - it wont. There is always a reversion to the mean, especially for a vanilla bank that pays out 80% of earnings and has strict capital requirements that limit credit growth.
If you look at CBA's earnings multiple over history, its 1 years worth of data v 33 years worth. This year is not the norm, its the outlier, and the reversion to the mean will happen (it always does). Do you get of the beach now or stay trying to milk a few more hours of sun. Some think the Tsunami isnt coming, others think they will be able to get out in time. Whether its next month or 6 months from now, the reversion to the mean Tsunami is on the way. Its inevitable.
CBA Price at posting:
$162.64 Sentiment: Sell Disclosure: Not Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)