Sectors that should outperform in the second half of this year include; Commodities, Infrastructure, Property trusts, Resources & Gold (as published in The Australian). No mention of banks in that line up. B.T.W. Brokers have a share price target of $82 on BHP. No such high valuations on the Banks.
Having seen what happened to bank share prices in the early 90.s when inflation / high interest rates were rampant. its a historical fact that history repeats.
If interest rates get to say 2.50% + then the housing market will be cooked. Defaults on mortgages, business closures, bad debts, forced sales, depressed housing market will be the norm. We have seen all of this before. A lot of people MAY lose a LOT of money if forced to sell their house after buying at the top of the market. I had worked in both sectors for many years. (Finance & Real Estate) and have witnessed the destruction of family lives caused by huge debts that can not be serviced.
As for Bank shares...............well if you have time on your side then ride out the rout. Those with cash reserves will be waiting for signs for a re entry. This cycle of rate hikes will be short lived imo as the economy simply can not handle it. RATE REDUCTIONS will / should recommence late 2023. I will ring the bell when buying Banks again. Unlike some investors its all about preservation of capital for me as I dont have time on my side.
NAB Price at posting:
$28.91 Sentiment: None Disclosure: Not Held
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