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It’s all over for the banks. World-wide. There is nowhere to go. Well, except perhaps down. Let’s look at some charts.
The US main banking index has been on one big slide over the last five-months:
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And you might say it is about there. And you could be right. But the Dow Bank index thinks differently:
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Maybe a relief rally and then another slide. And yes, some will take this opportunity to bail if they can get a slightly better price.
Our local banks have also been on a big dipper:
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No matter what chart I look at for any banking indices, all I can see is a range trading pattern like this:
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As you can see, the banking sector has lost nearly half of its value since the peak of almost four years ago and many retirees - here and in other countries like the USA and England - still have pensions which are a fraction of their former value, and life is a little meagre.
Unfortunately, I can’t offer even a glimmer of hope.
If banks hold within this range trading pattern, then at least further face-value erosion is unlikely. Of course, for local retirees the attractive franked dividends are some compensation but if you take inflation into account, real value is being threatened.
We could stay in this range trading pattern for some years. Yes, scary.
Enjoy the ride
Tom Scollon
Chief Analyst |