The big four no more?

Monday, 2 September 2019
Adelaide, Australia
By Bernd Struben

Is it time to sell the banks and buy bitcoin?

Only the most devote readers will recognise that line. And you’ll need to have been with us for some time.

Give up?

That, folks, was my opening sentence in Port Phillip Insider back on 29 November 2017.

At the time, bitcoin was worth US$10,031…very close to where it sits today.

The world’s biggest crypto by market cap had been on a tear all year. It started 2017 at US$997. Meaning on 29 November it was already up 1,004% for the year.

And it would keep running hard for three more weeks. Bitcoin topped US$19,700 on 17 December, before running out of puff and falling for most of 2018.

As for Australia’s Big Four banks?

They were all down a few percentage points for the year by 29 November 2017.

Australia and New Zealand Banking Group [ASX:ANZ] was the biggest loser, down 4.98%, excluding dividends. Commonwealth Bank of Australia [ASX:CBA] had suffered the least, down 1.35% for the year. This when the ASX 200 had posted an appealing 6.3% gain during the same timeframe.

I’m sure you recall why the banks’ shares were under pressure regardless of their impressive profitability.

Despite then Prime Minister Malcolm Turnbull’s adamant rejection, investors were cottoning on to the fact the Banking Royal Commission was increasingly likely to get off the ground.

And indeed, on 14 December 2017, Turnbull threw in the towel and the government announced the banking commission was a go. And, boy, did commissioner Kenneth Hayne dig up some damaging revelations over the following months.

Rather than rehash those today, let’s see how the Big Fours’ share prices have held up since 29 November 2017 (excluding dividends).

ANZ is down 8.0%.

CBA is down 3.4%.

National Australia Bank Ltd. [ASX:NAB] is down 7.6%.

And Westpac Banking Corp [ASX:WBC] is down 11.0%.

Over the same time, the ASX 200 is up 9.8%.

So selling the banks back when the royal commission was beginning to look increasingly likely could have saved you almost two years of loss making investments. Though ridding yourself of exposure to the banks is trickier than you may think…if you have a managed super account.

I take you on this trip down memory lane for a reason. And it’s not to pat myself on the back. I’ll be straight forward here.

The royal commission writing was on the wall for anyone who cared to read it…which was obviously going to have a negative impact on the banks.

And the only reason I was confident enough to suggest you consider bitcoin at US$10,000 in November 2017 was thanks to our resident tech guru, Sam Volkering. We’ll get back to that below.

But first, the fallout from the banking commission appears far from over.

This headline comes from the AFR (19 August), ‘ASIC on the verge of Hayne litigation blitz’. The article continues:

ASIC is planning a litigation blitz in coming months as it puts up to 50 matters into the courts, many of them arising from the Hayne royal commission.

ASIC deputy chairman (enforcement) Daniel Crennan, QC, has told The Australian Financial Review that on top of the 13 referrals from the commission, the regulator was looking at “three times as many” case studies with a view to legal proceedings.

‘“There are a very large number of investigations on foot and there will be cases being issued in coming weeks, which are the result of those investigations,” Mr Crennan said.

“Those matters will culminate in proceedings being issued before Christmas, and over the next few months…”

Have another look at the past 22 months’ performance for ANZ, NAB, CBA and Westpac above. With the litigation blitz set to take off you can expect all the banks’ share prices to come under renewed pressure.

That’s all bad enough.

But it could be about to get a heck of a lot worse. That’s according to a brand new whitepaper by Ryan Dinse over at Exponential Stock Investor.

If Ryan’s right, the bank’s glory days are well and truly behind them…forever. But he expects their demise will lead to a selection of new rising stars.

I can’t give you any more details today. Keep an eye open for Ryan Dinse’s report, due out later this week. I’ll let you know here the moment that’s available.

Now, a look at the markets…

Markets

Over the weekend, the Dow Jones Industrial Average closed up 41.03 points, or 0.16%.

The S&P 500 closed up 1.88 points, or 0.06%.

In Europe the Euro Stoxx 50 index finished up 15.43 points, or 0.45%. Meanwhile, the FTSE 100 gained 0.32% and Germany’s DAX closed up 100.40 points, or 0.85%.

In Asian markets Japan’s Nikkei 225 is down 63.70 points, or 0.31%. China’s CSI 300 is up 1.11%.

In Australia, the S&P/ASX 200 is down 33.91 points, or 0.51%.

West Texas Intermediate crude oil is US$54.83 per barrel. Brent crude is US$58.65 per barrel.

Turning to gold, the yellow metal is trading for US$1,528.55 (AU$2,273.95) per troy ounce. Silver is US$18.43 (AU$27.42) per troy ounce.

One bitcoin is worth US$9,769.54.

The Aussie dollar is worth 67.22 US cents.

The return of crypto-mania

Now back to Sam Volkering…and why I was confident in suggesting you consider investing in bitcoin back in 2017.

Sam, as you may know, has a penchant for all things tech. A penchant that synchs perfectly with his love of small-cap stocks. It’s a combination that’s served his readers over at Revolutionary Tech Investor well.

You won’t be surprised then to learn that Sam’s been onto the cryptocurrency story since its earliest days. In fact, he bought his first bitcoin way back in 2010, for around US$12.

And in November 2016 he became the first Australian analyst I’m aware to actively recommend bitcoin to his subscribers of Revolutionary Tech Investor. That’s when one bitcoin was worth US$735.

Now in case you’re wondering, Sam still has an active buy recommendation for bitcoin. He knows better than to make day by day price calls. You’re better off at the pokies.

But casting his gaze over the next 12 months, Sam is convinced we’re entering the next phase of crypto-mania. A buying frenzy that will see bitcoin blast past its December 2017 highs. And one that will see a few smaller ‘alt-coins’ do far better.

The specific details, as you’d expect, are reserved for his subscribers.

Don’t try to subscribe now though. You won’t be able to.

Don’t worry, though. Sam’s premium investment advisory service isn’t going anywhere. Quite the contrary.

I’ll have some exciting news to share with you about Revolutionary Tech Investor on Wednesday. That’s when publisher James Woodburn opens to the door — briefly — to an astounding new offer.

Stay tuned…

Cheers,
Bernd