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Shorting the Australian Housing Market - Make Money From Property Crash; Short the property market
Topic Started: 14 Apr 2011, 07:33 PM (20,957 Views)
miw
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Stavros
3 May 2013, 12:54 PM
If you wanted to short the CBA...I could not think of a better time than this afternoon.

Puts 3 years out, strike price of $20.00 a share.

This sucker going down!!!!

I had some dealing with the CBA in recent weeks that have confirmed a few things:
- They are useless in terms of the back office IT system...no one knows what is going on there.
- They are doing anything possible to increase people's credit card limits, obviously looking for a new way to push debt
- They employ the leftovers of the finance industry, i.e. The rejects from Mac Bank

So you are saying we should be buying Apr 2016 $20 puts on the Commonwealth bank? (Does such a beast even exist to be bought?)

Seriously?

It's very hard to short dividend stocks because you have to pay the dividends, and such long-term option strategies are very expensive as well.

If you really think the stock is going to tank this year, I'd suggest buying $75 calls and selling an equal number of $20 calls, expiring January 2014. You'd break even at a price somewhere around $66-$68 most likely.

Mind you, every bank I have ever dealt with sounds like the description you just just gave.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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peter fraser
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I wish that I had a dollar for every post I read on how profitable it would be to short Australian banks - I think that Money Morning wrote several articles on exactly that.

Considering how much they will have lost on those trades, there should be a plaque on the floor of the ASX that reads -

"Here lie the bodies of all of those who went short on Australian Banks, they bled to death a long time ago"

It seems a fitting tribute to all of those who so willingly risked their fortune on such a risky trade. We could even have a medal struck to be presented posthumously (financially speaking) to the widows of those so gallant.
Any expressed market opinion is my own and is not to be taken as financial advice
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earthsta
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peter fraser
3 May 2013, 01:43 PM
I wish that I had a dollar for every post I read on how profitable it would be to short Australian banks - I think that Money Morning wrote several articles on exactly that.

Considering how much they will have lost on those trades, there should be a plaque on the floor of the ASX that reads -

"Here lie the bodies of all of those who went short on Australian Banks, they bled to death a long time ago"

It seems a fitting tribute to all of those who so willingly risked their fortune on such a risky trade. We could even have a medal struck to be presented posthumously (financially speaking) to the widows of those so gallant.
Wouldn't say that Peter
peter fraser
3 May 2013, 01:43 PM
I wish that I had a dollar for every post I read on how profitable it would be to short Australian banks - I think that Money Morning wrote several articles on exactly that.

Considering how much they will have lost on those trades, there should be a plaque on the floor of the ASX that reads -

"Here lie the bodies of all of those who went short on Australian Banks, they bled to death a long time ago"

It seems a fitting tribute to all of those who so willingly risked their fortune on such a risky trade. We could even have a medal struck to be presented posthumously (financially speaking) to the widows of those so gallant.
Wouldn't say that Peter.

Back in the old Investorweb days some moron told me I was an idiot shorting MQG at $90. Unfortunately, Investorweb closed down before I had a chance to rub his nose in it. :tu:
Edited by earthsta, 3 May 2013, 02:14 PM.
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peter fraser
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earthsta
3 May 2013, 02:13 PM
I wish that I had a dollar for every post I read on how profitable it would be to short Australian banks - I think that Money Morning wrote several articles on exactly that.

Considering how much they will have lost on those trades, there should be a plaque on the floor of the ASX that reads -

"Here lie the bodies of all of those who went short on Australian Banks, they bled to death a long time ago"

It seems a fitting tribute to all of those who so willingly risked their fortune on such a risky trade. We could even have a medal struck to be presented posthumously (financially speaking) to the widows of those so gallant.
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Wouldn't say that Peter.

Back in the old Investorweb days some moron told me I was an idiot shorting MQG at $90. Unfortunately, Investorweb closed down before I had a chance to rub his nose in it. :tu:
Pre GFC you would have made a motza, and as we are again getting close to the peak again it might be worth considering, but all of the posts that I saw were when banks were at the bottom. A government backed industry was never going to be allowed to crash and become valueless.

What is your peak call for CBA - $80 or now?



Edited by peter fraser, 3 May 2013, 02:22 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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earthsta
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peter fraser
3 May 2013, 02:20 PM

What is your peak call for CBA - $80 or now?


I'll have a look over the week end and let you know.
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Admin
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Are bank stocks overvalued?

May 27, 2013 - 5:04PM
Glenda Kwek

Analysts are once again questioning whether Australian banks are overvalued, after the financial sector led last week's stock market sell-off.

The big four banks have been trading near their historic valuation highs, with Commonwealth Bank’s price-to-earnings ratio recently lifting to about 15½ times its annual earnings, Platypus Asset Management’s chief investment officer Don Williams said.

CIMB analysts John Buonaccorsi and Ashley Dalziell said they believed local banks were about 20 per cent overvalued on most fundamental ratios.

“Using the Gordon growth model, current market pricing implies the Australian bank sector can achieve a constant 7 per cent terminal growth rate, or alternatively a 27 per cent [return on tangible equity], both of which are unlikely to be achieved,” the analysts said in a research note.

IG Markets' Evan Lucas said when combined, Australian banks were worth about $400 billion.

“This leads us to the fact that CBA, on every metric, is the most expensive bank in the world, even with the slight correction last week. With EBIT and NPAT guidance in low- to middle-digit levels we are asking, is it worth it,” Mr Lucas asked in a morning report.

Mr Williams said Commonwealth Bank’s highest price-to-earnings ratio was in 1999 at about 17 times earnings.

“It's traded above 15 times quite a bit in its history," Mr Williams said. “We would argue that 14 or 15 times is at the high-end of its valuation range and the low end is around 10."

Last week, UBS analyst Jonathan Mott described Commonwealth Bank as the ‘‘most expensive large bank in the world by nearly every measure’’.

Using measures such as pre-provision profit, which looks at a bank’s core earnings, and tangible book value, which calculates the net asset value of a company excluding intangible assets and goodwill, the big four Australian banks were at the top of the world's most expensive banks list, followed by the Canadian and Scandinavian banks.

Read more: http://www.smh.com.au/business/markets/are-bank-stocks-overvalued-20130527-2n6s2.html
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Fleur
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davede
14 Apr 2011, 07:33 PM
Hi all,

I'm quite new to forums and all. :bye:

The more I peruse the various threads and posts around the property forums the more I come across a dedicated hard-line base of property crash advocates.

They make some compelling and interesting cases for their arguments and I am always happy to read and to learn.

What I thought may be more useful or to provide a bit of help to investors is providing some means or advice to make money if a crash were to occur.

This topic is not meant to incite any rioting etc.

I think it would just be genuinely helpful to discuss ways to profit from a property crash and what instruments, securities or methods any crash advocates have set up to help them do so.

Again, I don't intend to incite any controversy here.
The best way to profit from a crash; have solid employment; have considerable cash savings; have a good credit history. Now just wait for the slide to continue!
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Trojan
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If people started shorting our banks when this thread first started, they would have lost a lot of money (including all the dividends tey would have had to pay over that time)
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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genX
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Trojan
28 May 2013, 12:16 PM
If people started shorting our banks when this thread first started, they would have lost a lot of money (including all the dividends tey would have had to pay over that time)
You have to pay dividends on an option? I've learned something new today. How about CFDs?

http://www.asx.com.au/asx/markets/optionPrices.do?by=underlyingCode&underlyingCode=CBA


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Lucky
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Lucky those who have been calling for a correction or crash have not had a ready mechanism to short the property market.

The crash or correction will only happen when it is forced by an uncontrollable, possibly external factor and as we approach ZIRP we become more and more vulnerable, as monetary policy is rendered useless for stimulation of activity.

Until there is gross oversupply or high unemployment there is unlikely to be a property crash as politicians and the RBA will do everything they can to prevent it.

Small families mean that the young can rent and wait for the oldies to fall off the perch.

The lesson for the young is marry an only child whose parents own a nice home and have some super to keep them going.
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