I am a holder of MQG but did lighten my position by more than...

I am a holder of MQG but did lighten my position by more than 50% over the past four months. Hope we can keep the discussion civil and feel free to disagree.

I am willing to concede
1. This is the best Australian Bank. Run by the best management.
2. This would be higher in 10 years.

If someone does not want to trade MQG for the rest of their life, then I have no issues with that strategy. However, I have always made more money by increasing and decreasing based on the MACRO picture and looking at the growth environment ahead of companies. Way more money.

I always felt buy and Hold forever is overrated but buying 2-5 years was a good strategy for me. Even the best proponent of the buy and hold forever strategy, frequently buys and sells. Look at buffet 13F and, he has exited the entire Wells Fargo position and now pivoted to Citi which by all metrics is also undervalued. No one loses money by taking some profit at the top and that is what I have done with MQG. I brought a huge quantity when this dropped to 80-90 dollars in April 2020. Sold when it reached over 200 and some more when it was 190 when the growth outlook deteriorated.

My bear case is company-specific as well as macro. Macro is what I study the most. That creates events such as the one we are in.

Company issues
1. This is still overvalued. I was initially thinking of writing this when it was 190 dollars, but it has dropped a further 5% and change. PB which is the best measure for a bank (plenty of faults granted) is still 2.45. I am looking at overseas banks of course for comparison. Look at BAC it 1.18. JPM 1.37. Major four Australia banks ANZ 1.15, WPC 1.19, and CBA is other overvalued bank which I have lightened my position.

2. limited avenues for growth: Pathway for M&A and investment activity is getting difficult. Most of the M&A and corporate activities happen at the top of the cycle or after a credit event (record amounts of SPACS and ridiculous Twitter deal at 55 dollars apiece at the top of the cycle). I think we are well past the top of the cycle and a few quarters away from credit events. Granted in the high yield space there seems to be a little bit of stress developing.

3. Mortgage market will downtrend (that was a growth engine, but I felt this would be hard in the next couple of years)