CBA - Commonwealth Bank of Australia

[ZacR]

In my humble opinion, no-one is going to agree on whether or not @ $44 a share is value for Commonwealth Bank.

If you are a long term investor there is no way you can tell me that $44 is not a bargain. A cataclysmic event or the monetary system as we know it would have to collapse for The Commonwealth Bank to completely 'tank'.
It is only going to go up, guaranteed, in the long term. Above and beyond its $62 high. The 1920 collapse recovered. The 1987 collapse recovered. This will recover.

If you are a short term investor/ trader $44 is very realistically NOT a bargain or the lowest the share could possibly easily fall - if you are talking weeks/ months depending on how much the current credit market, US economy etc etc is travelling...

As for saying that the Commonwealth Bank is not one of the most stable of the big 5. Please...

 

[Bill M]

In my humble opinion, no-one is going to agree on whether or not @ $44 a share is value for Commonwealth Bank.

If you are a long term investor there is no way you can tell me that $44 is not a bargain. A cataclysmic event or the monetary system as we know it would have to collapse for The Commonwealth Bank to completely 'tank'.
It is only going to go up, guaranteed, in the long term. Above and beyond its $62 high. The 1920 collapse recovered. The 1987 collapse recovered. This will recover.

If you are a short term investor/ trader $44 is very realistically NOT a bargain or the lowest the share could possibly easily fall - if you are talking weeks/ months depending on how much the current credit market, US economy etc etc is travelling...

As for saying that the Commonwealth Bank is not one of the most stable of the big 5. Please...

I could not agree with you more. Too many people on the board think short term. I have been invested in the market since 1987, I've seen crashes, bear markets, corrections, Asian financial Crisis's, terrorist attacks and host of doom and gloom stories through all those years and yet CBA is still here.

Even with all this garbage going on now in the financial sector my original investment in CBA from when I bought in 1996 is up 450%, yes 450% and in all those years I keep on getting the "goodies" those sweet tax paid dividends. This year the day before ex dividend date I bought another large parcel for myself and I will get the current dividend plus all the dividends that will come in the future. CBA will come out of this in the future and I have no doubt that they will go up from these levels, short term I don't care. Think long term, not short term and you will always come out in front.

 

[ROE]

I could not agree with you more. Too many people on the board think short term. I have been invested in the market since 1987, I've seen crashes, bear markets, corrections, Asian financial Crisis's, terrorist attacks and host of doom and gloom stories through all those years and yet CBA is still here.

Even with all this garbage going on now in the financial sector my original investment in CBA from when I bought in 1996 is up 450%, yes 450% and in all those years I keep on getting the "goodies" those sweet tax paid dividends. This year the day before ex dividend date I bought another large parcel for myself and I will get the current dividend plus all the dividends that will come in the future. CBA will come out of this in the future and I have no doubt that they will go up from these levels, short term I don't care. Think long term, not short term and you will always come out in front.

You can say that for most blue chip company, WOW, WDC, CSL, COH and many others. The big distinction is at what price you pay for a stock is critical for your return.. If I can get a stock for $10 dollars and you get it for $13 my return going to exceed your at whatever angle you looking at it.

if stock go to $11 and sit there for a year, my dividend payout compared to price is greater and I'm up 10% you going backward 15% ..come second year it go to 13 bucks I'm up 30% you break even and the compounding effect make it so much better if you pay a lower price.

That why people like Warren Buffett get extra-ordinary return because the price they pay is critical to their success.

 

[MRC & Co]

Anyone think technically, this could be a turnaround? Doji cross followed by a hammer?

Possibility, even if only very slight chance!

Fundamentally, still too expensive.

ROE is only around 18, will fall in the coming years due to smaller earnings growth, risk is high for a bank in this current climate and book value is not anywhere near its current price.

Just dont see see much point of getting on CBA at this current time, perhaps short-term if this is a quick turnaround and that gap created yesterday is filled (but is it a runaway gap or an exhaustion gap? Though, volume doesnt appear to point to either), but I think this will see some further hammering before its a viable long-termer.

Just a few thoughts.

 

[dhukka]

I could not agree with you more. Too many people on the board think short term. I have been invested in the market since 1987, I've seen crashes, bear markets, corrections, Asian financial Crisis's, terrorist attacks and host of doom and gloom stories through all those years and yet CBA is still here.

Even with all this garbage going on now in the financial sector my original investment in CBA from when I bought in 1996 is up 450%, yes 450% and in all those years I keep on getting the "goodies" those sweet tax paid dividends. This year the day before ex dividend date I bought another large parcel for myself and I will get the current dividend plus all the dividends that will come in the future. CBA will come out of this in the future and I have no doubt that they will go up from these levels, short term I don't care. Think long term, not short term and you will always come out in front.

I don't think anyone would argue about the benefit of taking a long term view. If I bought CBA in 1996 I wouldn't sell either, however I question the wisdom of buying at current prices. The banks are going into a cyclical downturn. Profit growth will flatten if not go backwards over the coming 12 months and bad debts will rise.

It's not that CBA is a bad company but that there are other stocks that do not have the headwinds the banks will be facing over the next 12 months and are more attractively priced.

 

[Uncle Festivus]

Investing was for the bull, now it's trading time. CBA a great day trade at present.

 

[wavepicker]

Investing was for the bull, now it's trading time. CBA a great day trade at present.

Yeah, bought some call options on monday arvo. Certainly is a traders market at present and timing is paramount in this sort of environemnt. However IMO this market will find a reasonable low in April for a more sustained rally into next year but thereafter for choppiness to contibue for some time.

 

[refined silver]

If you are a long term investor there is no way you can tell me that $44 is not a bargain. A cataclysmic event or the monetary system as we know it would have to collapse for The Commonwealth Bank to completely 'tank'.
It is only going to go up, guaranteed, in the long term. Above and beyond its $62 high. The 1920 collapse recovered. The 1987 collapse recovered. This will recover.

The 1929 collapse did recover. In 1954 the DOW hit the same level again.

1987 was a bull market correction, not a change of an 18 yr secular trend.

In 1966 stocks went sideways for 16 yrs til 1982, but that was in a decade of high inflation. In real terms in lost 75%!

The Nasdaq is still down over 50% 8 years later.

Its an absolute fallacy stocks always go up. Over the last 100 years, they have tended to go in 15-20 yr long term cycles. Commodities tend to be countercyclical. In other words, while paper stocks are going down 66-80, commodities are going up, when paper goes up 1982-2000, commodities go down, and from 2000 on while commods go up, paper stocks/bonds etc tend at best to sideways trends, but allowing for inflation lose money.

Aus markets are a bit muddled because of the high proportion of commodity based stocks which helps the whole economy.

In real terms CBA is not guaranteed to go up at all.

If you want some reading on these long cycles with charts etc, I will post them.

 

[MRC & Co]

Investing was for the bull, now it's trading time. CBA a great day trade at present.

To short or to go long?

But I agree, the market definately dictates what time it is, you just have to adapt to it to survive!

 

[ShareIt]

Anyone think technically, this could be a turnaround? Doji cross followed by a hammer?

If you look at a weekly chart, it appears that a hammer is forming and we have RSI oversold. I would wait for confirmation on the turn before buying up as this stock is still in a down trend. In fact, it's almost free falling! $41 could prove to be good support.. next one down looks to be $37... just have to wait and see!

 

[MRC & Co]

If you look at a weekly chart, it appears that a hammer is forming and we have RSI oversold. I would wait for confirmation on the turn before buying up as this stock is still in a down trend. In fact, it's almost free falling! $41 could prove to be good support.. next one down looks to be $37... just have to wait and see!

Yeh, I still wouldnt buy this one, banks got SMASHED today! They are really under the "hammer" themselves ATM. Would far prefer some of the commodity stocks currently on good runs and nearing production. Such as EQN (made 15% on this one in a week so far) and SGX. Also, MCR appears to be headed for a good run, with good profit results released (one of the very few in this latest reporting period). See how we go, but the banks are a definate for finger burning at the moment! Infact, I should have started shorting them LONG ago! Idiotic not too! But there still could be further room with all this fear out there and the fact that its not nearly over yet.........just how far will it go...........may be worse than we think and the banks are going to continue to take the brunt of it, since afterall, they are really amongst the roots of the problem.............

 

[cuttlefish]

I took a bit more profit on my short position in the middle of the day - the options are starting to get towards the pointier end of theta decay and a recovery would have reduced IV's as well. Unfortunately the latter part of the day proved that to be a bad idea but at least some of the position is still open (60% closed, profitable, 40% open free carried). Still learning about options - I don't regret the partial profit taking - the options were well in the money so delta was on my side, but any reversal would have killed delta, theta was getting to the pointy end so wouldn't save it and IV's (vega) would also have dropped off with a reversal. (and the accelerated drop into the close means the exact opposite has occurred - except for theta, all other factors (delta, gamma and vega) I'm assuming would be well increased in the last half hour trade adding to the value of the position, but who knows what overnight and tomorrow will bring).

 

[ShareIt]

Shorting CBA might not be such a good idea now... the risk/reward ratio wouldn't be worth it as it is well off it's resistance zone of about $48... waiting for a correction and test of resistance is a much better risk with a large trading range down to $43 so far.

 

[treefrog]

Shorting CBA might not be such a good idea now... the risk/reward ratio wouldn't be worth it as it is well off it's resistance zone of about $48... waiting for a correction and test of resistance is a much better risk with a large trading range down to $43 so far.

agrees 100% - would not short here - look instead for start of lift back to $52 - the blue bit; but first target would be 38% retrace of last drop - hey that's $50 - too easy!!

 

[M34N]

agrees 100% - would not short here - look instead for start of lift back to $52 - the blue bit; but first target would be 38% retrace of last drop - hey that's $50 - too easy!!

Agree, even in the short term this stock (along with all the other financials) is just ridiculously oversold, we should see a rebound eventually. Like others have said, fundamentally, Australian banks are run so well that even with major write-downs because of bad US sub-prime loans, they still make big profits. US banks are posting big losses, and are down roughly the same % as Aussie banks -- how does that make sense? Our interest rates are going up, and the economy here is still booming, unemployment at record lows, record high wages -- sounds like the economy here is fine to me. Selling on news of record profits and dividends? Things don't add up.

I guess markets are just factoring in a "worst case scenario" for financials, not based on any real logic, just people getting out "in case" something bad happens next. This is the best time to invest IMO, even Babcock rallied hard today, I expect some rebounding to occur soon.

FWIW, I bought some CBA at $42.50 at the open this morning, looking to go in further over the next few weeks if it goes down further, set a sell at around $38.00 to protect myself, seems to be a safe price for now. Only time will tell!

 

[lucifuge]

1. The US subprime will continue for some time. This is due to two main factors; one, some financials continue to reveal problems that have been deliberately understated (or concealed), secondly the resulting ongoing herd 'fear' as a consequence.

2. The link in Aussie banks with lending with US banks.

(1.) and (2.) combined will effectuate further drops in the majors banks. It's really that simple. Those waiting for a dramatic return to normal levels have a very long wait on their hands. Any arrest short-term in the declining trend(s) will be extremely shaky.

 

[dhukka]

To the contrary, it's perfect. What we want to see is a fall into that date. If it falls into that date chances are it might see the low tommorow. My dates are plus or minus a day, the reason for this is because it depends what time of the day a high or actually occured in the past that determines the future probability. A turn in the morning for example 2-3 months ago, can add an extra day when doing fibonacci expansions in forward timeframes.

Well it definitely fell into 18th, as you would expect when a stock goes ex-div however it has continued to go lower. Was Mr Fibonacci telling fibs?

 

[Uncle Festivus]

To short or to go long?

But I agree, the market definately dictates what time it is, you just have to adapt to it to survive!

Both. +- 2% up or down then I look for the woody or the waterfall on the intraminute.

Short term I think the daily range is implying some sort of capitulation of the traders and nervous hands and possibly an accumulation time? Depends on your timeframe as per the 2 charts below. Has it oversold? How deep are your pockets?

To put things in perspective, have the current global issues that may affect CBA been over priced in?

 

[josjes]

Both. +- 2% up or down then I look for the woody or the waterfall on the intraminute.

Short term I think the daily range is implying some sort of capitulation of the traders and nervous hands and possibly an accumulation time? Depends on your timeframe as per the 2 charts below. Has it oversold? How deep are your pockets?

To put things in perspective, have the current global issues that may affect CBA been over priced in?

Yes, study the trend of DOW and FTSE. Where they lead we follow. At the moment, market is basically being driven by one factor. The fate of the Monoline Insurers/Bond Insurers, ie. MBIA AMBAC and the like.
Where these company shares price lead, Financial follows. Where financial leads, the whole market follows. Last night MBIA closed up 4%. So it looks like market is placing bet that short term wise, there will be satisfactory solution at least. I will place my 'bet' on the market breaking the symmetrical triangle up north and we will get a nice rebound up for at least till mid-March. Until then the market will get a reality hit on the real issue of recession and concerted global growth slow down. Watch out for commodities in mid-March then.

As my quote in the XAO Analysis few days ago, the market is being driven by these Monoline / bond insurance businesses.

Uncle, we have good news coming out of US as a catalyst to kick bank shares up for the next few weeks.
AMBAC share went up 16% on the rumour that it will get a lifline to shore up its capital. The whole financial sector got a nice bounce 4% in the last half hour of trading. Aussie banks will up at least 2-3% Monday I reckon.
Just go along with the ride for a few weeks until we found more write downs on the banks balance sheets.

 

[Uncle Festivus]

Yes, it's a knife edge for the US banking system generally - how deep are their pockets???