From Capitalist Exploits:
Market dislocations occur when financial markets, operating under
stressful conditions, experience large widespread asset mispricing.
Welcome to this week’s edition of “World Out Of Whack” where
every Wednesday we take time out of our day to laugh, poke fun at
and present to you absurdity in global financial markets in all it’s
glorious insanity.
While we enjoy a good laugh, the truth is that the first step to
protecting ourselves from losses is to protect ourselves from ignorance.
Think of the “World Out Of Whack” as your double thick armour plated side impact protection system in a financial world littered with drunk drivers.
Selfishly we also know that the
biggest (and often the fastest) returns come from asymmetric market
moves. But, in order to identify these moves we must first identify
where they live.
Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.
In this week’s edition of the WOW we’re covering Australian banks
A friend working at one of the big 4 Aussie banks sent me something which led to my pulling up the charts of the big 4. Whoah!
It blew me away because we have a collective head and shoulders top,
something that should cause indigestion for any investors long the
sector.
I want to bring to your attention the Commonwealth Bank (CBA) below
what is sporting one of the biggest head and shoulders tops I’ve ever
seen.
Not long ago I highlighted the good ol’ land down under suggesting
that maybe, just maybe, Australian housing prices had diverged from
reality. Perhaps, looking around the world at all the fun that could be
had with unreasonably low interest rates, they felt lonely and wanted to
join the party. In that article I pondered the following:
“I’m struggling to understand how an economy
increasingly running on the over consumption of real estate financed by
mortgage debt is anything but insane?”
To understand Australia it’s useful to get a grasp on China. After
all, when your biggest trading partner is experiencing a slowdown and at
the same time your economy is increasingly being held up by investment
in housing, then the odds are decent that risk in the system has
increased....MUCH MORE
