US$50 billion in market cap erased

In another edition of Perspective & Misnomers,

JP Morgan’s stock price has fallen 12% in the past 3 days.
This means its market capitalisation has declined by US$55 billion.

That is the same amount as all of Westpac Bank’s total market capitalisation.

Furthermore, in the past 3 days, 95 million shares of JP Morgan were traded, which is equal to US$15.2 billion worth of stock.

This is equal to 2 days of traded value of the whole Australian Stock Exchange.

That’s a lot of money when you put in it perspective.

Incidentally, JP Morgan’s stock is back to the same price as 11 months ago.

January 20, 2022
by Rob Zdravevski
rob@karriasset.com.au

Westpac’s hitting resistance and holding support

Another price chart I am watching is that of Westpac Bank (WBC.AX).

I often post technical charting comments on Linkedin but my equity investing work always starts with identifying themes or trends and then moves onto fundamental mathematical analysis (balance sheets, income statements etc)…….

I use technical analysis to help with my price entry and exit as numbers and price charts make wonderful patterns which also assists with probability.

I am fundamentally bullish on banking stocks, however I have lightened some bank holdings as they recently reached historically overbought prices and fully valued valuations.

In Westpac’s case, it was a prudent thing to do. After all, the stock rose 57% from $16.50 (my buy price) to $26 within 10 months.

The high was $27.12.

It’s currently $25.60.

The share price capitalised what I thought was more than 2 years worth of earnings. So at that price (in June 2021) I asked myself do I want to pay this price (buy the stock) which is already factoring in 2024’s earnings?

From here, I think Westpac’s price trades below $24.50 (breaking that lower trend line) and makes a visit to $22.30.

Buying it 13% cheaper would be nice.

p.s. that line floating through chart is the 100 week moving average.

I’ll review this picture in late July/early August.

* this is not advice, just personal commentary.

July 2, 2021

by Rob Zdravevski

rob@karriasset.com.au

Bullish on Aussie Banks

After 5 years, I have now become bullish on Australian banks.

For example, Westpac Bank’s 2021 forecasts have it trading below 1x book value, on a P/E of 11 and the dividend yield should be 5%, not including the franking credits.

Furthermore, I think its net interest margins will increase (as longer dates interest rates rise) and all of their bad news and fines are no longer “new news”, Westpac’s stock price also has traded at monumentally oversold readings…….not on a daily nor weekly basis, but on a Monthly reading.

See the chart below and you’ll see it’s only happened twice in 27 years.

October 19, 2020
by Rob Zdravevski
rob@karriasset.com.au

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