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On 6th May 2021, you concluded: “My preferred picks remain the “best” and the “worst”, Commonwealth Bank and Westpac respectively.”
For investors: Do we now aim to buy CBA as the top of the 4 banks and WBC as the last or if one is selling, then sell WBC in preference to CBA?
I have the understanding (or perhaps misunderstanding) from most previous commentaries/reports that CBA may be a sell and WBC a better Buy?
Would value your comments with CBA vs WBC.
Thank you.
A: I think the banks divide neatly into two groups: CBA, and all the others. With the “others”, there is really very little to choose between ANZ, NAB and Westpac – so it comes down to price.
Until recently, I have been saying that Westpac represented the “best” value because the market rated it the “worst”. CBA is rated the “best”.
So my strategy is to play it with a combination of “the best” and “the worst”.
Because Westpac has performed better and is now more expensive, I think on a relative basis, NAB looks more attractive. So, CBA and NAB.
Now, there is no doubt that CBA is looking very pricey, but I am not a seller. I don’t know what to replace with, except more NAB, and I am just not convinced (yet) that NAB is going to materially outperform CBA.
