Questions of the Week – CBA and capital notes

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Question: Have banks like CBA had their day or is this a momentary fluctuation caused by investigations into their practices e.g insurance for credit cards? Do you think it’s best to sell CBA now and possibly buy at a lower price later or have they seen their day?

Answer (By Paul Rickard): I am probably out of step with the market – but I don’t think so. Please see my Banks – buy or sell article in Monday’s Switzer.

Rather, I take the view that “common sense” will prevail in due course and that markets will calm down and resume their upward trend. Given the impact that the Royal Commission has had on banks over its first couple of weeks, and the relative weighting that banks have in many investors’ portfolio, the question about whether to buy and increase weighting, or sell and decrease weighting, remains pertinent.

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