Australian Investment Blog

Beware the obvious trade! Slowly but surely from around 2013 to 2015 many retail Australian investors began adopting the simple attitude of "just buy the banks, they are the safe place to be". It's easy to imagine how this dangerous thought evolved with the local banking index doubling between 2011 and early 2015. Plus of course, there were the dividends, with many financial advisors saying "KISS" buy the banks with their large fully franked dividends, when compared to falling term deposits, makes them the safe and obvious investment. Unfortunately the rest is history as Australian banks have fallen around 30% since March 2015 BUT interest rates have continued to fall with the Australian 10-year bond rate dipping under 2% for the first time in history last week. We received numerous emails when we put out a sell on the banks in early 2013, some of them almost aggressive, perhaps a useful indicator for the future! Please don't think this report is Market Matters beating its own drum as we have since bought back into banks and our positions are currently losing money - they fell further than we anticipated. This report isabout another issue / concern we see on the horizon. The Australian Banking Sector Monthly Chart