Wow they were popular. Maybe still are; but I have not been to one in a couple of decades.
But I am really talking of Friday’s banks little spike.
And that is all it was and all it will be...
As I see the banks and finance sector generally – dominated by the banks anyway – are all tired.
They are back to 4-5-year levels.
Let’s take a quick run through them starting with the sector chart, then the four majors ANZ, CBA, NAB and WBC – all monthly charts – as we want to form a long-term view.
charts:
XFJ:
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S&P Financials (XFJ): Monthly Line Chart
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Click to Enlarge
ANZ:
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Australia and New Zealand Banking Group (ANZ): Monthly Line Chart
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Click to Enlarge
CBA:
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Commonwealth Bank (CBA): Monthly Line Chart
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Click to Enlarge
NAB:
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National Australia Bank (NAB): Monthly Line Chart
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Click to Enlarge
WBC:
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Westpac Banking Corp (WBC): Monthly Line Chart
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Click to Enlarge
Now that is not to say that there will not be up days and maybe periods of seemingly sustained movement – maybe – but we are not likely to see trending movement for many years.
Instos and retirees and long-term investors will continue to buy.
Banks will be good dividend servants and maybe even give a small annual percentage move. Perhaps more reassuring I do not see the stocks falling over a cliff. We might say money will be relatively safe.
I hear you asking what about CBA and WBC? Aren’t they looking at a wave five in the eye?
Study them for a moment and you will see that their retreat has been deeper than expected. Too late to bale out but not that bad anyway in the context of time.
CBA at $70 is not bad when you recall that listing value was of the order of $5.
If you are a long-term investor and bought at listing – you just see it out as you are laughing anyway.
To illustrate my point about "over retreating" look at WBC as an example:
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Westpac Banking Corp (WBC): Monthly Line Chart
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Click to Enlarge
This year it fell through support and is now languishing.
So if you want growth, look somewhere other than banks.
Enjoy the ride
Tom Scollon
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