CBA - Commonwealth Bank of Australia

[divs4ever]

CBA shares are extremely overvalued!! Forward p.e. in the mid 20s for a bank stock with no or negative growth projected for the next 2 or 3 years. It has a higher p.e. ratio than Alphabet in the U.S. and people say U.S. blue chips are overvalued!!

The intrinsic value per share of CBA is probably something like $80 - $90!

well you probably have to factor in 'the too big to let fail ' perception ( like say BHP ) as that extra margin of 'safety'

now sure we still run the risk of electing an extreme Government that would nationalize a stressed bank ( like the UK or Spain ) , but what chance of that

 

[qldfrog]

There is nothing on the horizon in Australia , that will encourage traders and or longer term investers to move away from financials.
ATM housing, construction and Govt infrastructure are the only growth sectors IMO.
Add to that the overhang of impending emissions penalties and it is a brave investor that can pick a winner, other than financials.
Again only my opinion.

Sadly i agree but still in black tulip frenzy .
I feel like shorting it but we are in Australia, the bank will be bailed out whatever the party in charge, cba will be the last to stand with heavy subsidies from my own taxes.
But i see more money putting it OS on other shares and currencies
But i understand why many are piling on
Will be interesting to see tomorrow..which should be red

 

[sptrawler]

Sadly i agree but still in black tulip frenzy .
I feel like shorting it but we are in Australia, the bank will be bailed out whatever the party in charge, cba will be the last to stand with heavy subsidies from my own taxes.
But i see more money putting it OS on other shares and currencies
But i understand why many are piling on
Will be interesting to see tomorrow..which should be red

I don't hold CBA, but do hold NAB and WBC in the SMSF.
Many Aust self funded retirees are probably heading for safety and rotating more toward dividends, as the speculative sector (mining) has been shot to pieces with the battery materials sector collapse.
The banks have had a huge inrush of funds as has VAS.
Older people have seen this scenario too many times, to not be cautious.
The Govt has no narrative as to what they are going to do with regard critical mineral processing and the opposition have said nothing other than nuclear power, so money is moving to safety.
An extra 2 million people are now having their money put in the banks every week.

 

[divs4ever]

I don't hold CBA, but do hold NAB and WBC in the SMSF.
Many Aust self funded retirees are probably heading for safety and rotating more toward dividends, as the speculative sector (mining) has been shot to pieces with the battery materials sector collapse.
The banks have had a huge inrush of funds as has VAS.
Older people have seen this scenario too many times, to not be cautious.
The Govt has no narrative as to what they are going to do with regard critical mineral processing and the opposition have said nothing other than nuclear power, so money is moving to safety.
An extra 2 million people are now having their money put in the banks every week.

yep , colour me cautious ( since the beginning of 2013 )

sure i have been early but early allows strategic boosting/changes to the assets ( say in March 2020 )

 

[Joe90]

I tend to agree with the assessment that it’s overvalued but it worth more than $90. As I mentioned earlier, I believed $125 was the maximum fair value, assuming a best-case scenario with no major issues and consistently high returns on equity. The idea was that buying at $125 would provide a 5% dividend yield (including franking credits) and 5% annual capital growth, resulting in a fair value of $145 in three years. However, buying today would mean paying a premium, essentially pricing in three years of growth upfront. While it's possible that everything will go smoothly and earnings will grow at an exceptional rate to justify this price, I don't see enough margin of safety to add to my existing position at this time. Nevertheless, I'm not selling either. Instead, I've written put options on the stock with a strike price below $125.

Hello VC, interested to know what broker you are using for ASX options trading please. IB?

 

[Value Collector]

well you probably have to factor in 'the too big to let fail ' perception ( like say BHP ) as that extra margin of 'safety'

now sure we still run the risk of electing an extreme Government that would nationalize a stressed bank ( like the UK or Spain ) , but what chance of that

@Value Hunter @divs4ever @sptrawler

Well, Also it’s probably important to understand my valuation was based on being able to buy at a price that would give you 5% dividend yield and a decent likely hood of 5% capital growth.

So a long term buyer that enters at the current $143 isn’t necessarily going to get a bad result, they will likely just receive a lower dividend yield than I factored in of 4.6% (inc franking) and lose some of the potential capital gain for the next 3 years because they have essentially prepaid that gain to the seller, once they are over that 3 year cap gain lose, their investment should resume the normal Dividend and cap growth I would expect over the long term.

 

[sptrawler]

@Value Hunter @divs4ever @sptrawler

Well, Also it’s probably important to understand my valuation was based on being able to buy at a price that would give you 5% dividend yield and a decent likely hood of 5% capital growth.

So a long term buyer that enters at the current $143 isn’t necessarily going to get a bad result, they will likely just receive a lower dividend yield than I factored in of 4.6% (inc franking) and lose some of the potential capital gain for the next 3 years because they have essentially prepaid that gain to the seller, once they are over that 3 year cap gain lose, their investment should resume the normal Dividend and cap growth I would expect over the long term.

That's very true and i think accurate, but as with any investor, it boils back to risk/ reward, available funds and how dependent you are on the dividends.
I Kick myself over many investment decisions, including not buying a bundle of FMG at $2.40, BHP at $2, CBA at $10 and most recently MQG at $15 in GFC era, another good one from that era I bought 2000 CSL at $27 and sold soon after at $30 because I retired at 55 and wanted some cash out. Lol

However having lived and worked since 1969 and seen downturns, there are only a few constants, one is consumer staples, two is banks and three is cash to pick up bargains in the crash.

I've seen BHP trashed to nothing twice in my working life, if I had a couple of million of them it wouldn't matter, if I was relying on a couple of thousand of them it would have been awkward.
Horses for courses.

 

[Value Collector]

That's very true and i think accurate, but as with any investor, it boils back to risk/ reward, available funds and how dependent you are on the dividends.
I Kick myself over many investment decisions, including not buying a bundle of FMG at $2.40, BHP at $2, CBA at $10 and most recently MQG at $15 in GFC era, another good one from that era I bought 2000 CSL at $27 and sold soon after at $30 because I retired at 55 and wanted some cash out. Lol

However having lived and worked since 1969 and seen downturns, there are only a few constants, one is consumer staples, two is banks and three is cash to pick up bargains in the crash.

I've seen BHP trashed to nothing twice in my working life, if I had a couple of million of them it wouldn't matter, if I was relying on a couple of thousand of them it would have been awkward.
Horses for courses.

Yes, as always your holding period matters. If your holding period is going to be longer than the cycle of fluctuations, then the fluctuations can be ignored, and you can just focus on the dividend yield range you signed up for.

But, if you need the money in a year, the risk of a 30% correction in the share price will more than offset your dividend.

So, in managing your portfolio you need to allocate capital in a way that aligns with the time frame you will need that capital returned to you.

Which for most people’s retirement plans normally means 90% or so that they don’t need for 3+ years can be in things like shares, and a portion of the capital equal to the amount they would need to draw down will need to be in investments like term deposits. (Keeping in mind that the 90% of the portfolio that’s in shares will be producing dividends, so it’s only the amount of capital you need to draw down that you want in Term deposits, not your full 3 years of living expenses.

 

[mullokintyre]

I agree with all comments that CBA is overvalued. However I think CBA is a favourite for moment traders as CBA has the best liquidity on the Australian Market place while financials are in favour. When we get sector rotation after the US rate cut, it will be interesting to see what CBA does then when these traders move to a different sector. However I am not shorting CBA any time soon.

Whether CBA is overvalued or not, is to some traders, immaterial.
If I can buy CBA at X today and sell it at x +15% in Z weeks, thats great.
Everything else is fluff.
Mick

 

[qldfrog]

Whether CBA is overvalued or not, is to some traders, immaterial.
If I can buy CBA at X today and sell it at x +15% in Z weeks, thats great.
Everything else is fluff.
Mick

Indeed trading vs super invested...
But CBA, even dreaded BHP are in ETFs I own via super.
ILC, VAS. All these artificially pumped super baskets
I sold 50% of most key shares on the 30/08 and hope buying back at end of month or before if i reach some thresholds and get an advantage that way..time will tell

 

[Value Collector]

Whether CBA is overvalued or not, is to some traders, immaterial.
If I can buy CBA at X today and sell it at x +15% in Z weeks, thats great.
Everything else is fluff.
Mick

Having bought CBA at $12 in 1996 and collected about $100 in Dividends and franking credits and having the share price now worth $140, I definitely wouldn’t say everything besides short term trading is fluff .

what matters to the long term holder is the real value of the business and the income stream it throws off, short term movements are fluff.

If you aren’t basing your decisions on proper valuations, you are essentially gambling which is fine if that’s what you like to do, but saying everything except the gambling element is fluff is a bit silly in my opinion.

 

[mullokintyre]

Having bought CBA at $12 in 1996 and collected about $100 in Dividends and franking credits and having the share price now worth $140, I definitely wouldn’t say everything besides short term trading is fluff .

what matters to the long term holder is the real value of the business and the income stream it throws off, short term movements are fluff.

If you aren’t basing your decisions on proper valuations, you are essentially gambling which is fine if that’s what you like to do, but saying everything except the gambling element is fluff is a bit silly in my opinion.

Perhaps you just need to reread what I wrote.
I spoke as a trader.
Said nothing about long term holders.
Mick

 

[Value Collector]

Perhaps you just need to reread what I wrote.
I spoke as a trader.
Said nothing about long term holders.
Mick

Yes, but the comments here discussing valuation are talking about from an investment perspective, and your comment does come across as if you are describing a longer term approach as fluff, other wise I can’t really see the point of your post.

 

[mullokintyre]

Yes, but the comments here discussing valuation are talking about from an investment perspective, and your comment does come across as if you are describing a longer term approach as fluff, other wise I can’t really see the point of your post.

You can infer what you like.
But I never implied any such thing.
Mick

 

[eskys]

Only a trader can understand the kind of fluff Mick was talking about.

 

[mullokintyre]

Only a trader can understand the kind of fluff Mick was talking about.

I collect it in my navel.
mick

 

[eskys]

Some collect them between their toes...appears there's been a misdiagnosis overnight; saw some crabs @ mullokintyre.

Anyhow, all sectors green overnight, so CBA should be ok...having said that, the banks have run hard. no lint or fluff today, good to be on the same plane...good luck

Edit: testing, testing @mullokintyre ...intial post has no highlight

 

[mullokintyre]

Some collect them between their toes...appears there's been a misdiagnosis overnight; saw some crabs @ mullokintyre.

Anyhow, all sectors green overnight, so CBA should be ok...having said that, the banks have run hard. no lint or fluff today, good to be on the same plane...good luck

Edit: testing, testing @mullokintyre ...intial post has no highlight

Passing, passing.
Just leave out the space.
mick

 

[eskys]

You're passing too much, I need the space, let's talk CBA. I'm looking for concrete, seriously.

 

[Dona Ferentes]

CBA dividend due to land on Friday, $2.50 ff

There's a DRP, and priced at $141.50. Pity CBA now trading around $137 !

also

5.1 Please provide any further information applicable to this dividend/ distribution.
Participation in the DRP for the 2024 final dividend is approximately 18.1% of Commonwealth Bank of Australia Ordinary Fully Paid shares on issue.

I'll take the cash