Select Page

I’ve only got a small bit of exposure to the global banking system and, frankly, I think it’s past time to get rid of even that exposure.

We’re in one of those banking sector moments where we know that banks are loaded up with assets that can’t be priced (in the case of some illiquid securities), or can’t be sold (as in the case of leveraged buyout obligations (LBO), or that are going bad at an unpredictable rate (mortgage loans.)

I bought Commonwealth Bank of Australia (CMWAY) back in November 2019 as a way to capture the high dividends being paid then by Australian banks but without the stock specific risk of a dividend cut from Westpac Bank (WBK), which I had owned in the portfolio.

I avoided that stock specific risk only to walk into a global recession and credit crunch that has hit Australian banks with their big exposure to the real estate market in the country really hard.

I think that market will get worse before it gets better–which is also true, in my opinion of the country’s commercial loan market–so I’m taking my 34.19% loss on Commonwealth Bank of Australia since my November 19, 2019 purchase of these shares. (It looks, by the way, like the next dividend payout on these shares will have an ex-date in August so there’s no point in waiting around for that moment.)

The sale of Commonwealth Bank leaves just one bank in all my portfolios. And that will be my next sell today.