It's a bit of a stretch to claim that the risk-free rate is 3%, when the RBA cash rate is only 1.50%. Yes, you can get higher than 1.50% at call with many banks, but often these accounts have limits on the amount that can earn those high interest rates. Regardless, the dividend is a corporate finance decision, and results in a bank reducing its assets in order to make the payment to shareholders. On the ex-dividend date, the share price of the dividend payer will usually underperform their peers by about the amount of the dividend payment. If and when they run into financial trouble, they have a greater need to raise capital than if they had reduced or eliminated the dividend. As such, it is of little consideration when deciding if/when/how to short Australian banks. If the dividend yield is of concern, then a short position in Australian banks could be paired with a long position in other Australian shares, and/or an ETF containing Aussie shares. Finally, I don't think shorting Australian banks has been a 'widow maker' in the last couple of years. A back of envelope calculation shows that most banks are about 15% their 52-week highs, compared to the ASX 200 which is only 3% below its 52-week high. .
Clearly you are a clueless moron so i wont waste further time on you outside mentioning if you are short a bank you HAVE TO PAY THE DIVIDEND amount the day a bank goes ex div and that since you advocated shorting banks in 2010 the RISK FREE aust govt 10y bond yield has averaged > 3% since . Good luck you are going to need it
https://www.elitetrader.com/et/threads/australian-housing-bubble-thread.199582/page-18#post-4471293 You may be pleased to know that I didn't short any Australian banks in 2010 and I did indeed by US equities instead. .
Yes - you caught me! I am a clueless moron! Guilty as charged! I was trying to keep it a secret but you caught me out! Yes, I am well aware that if you are short a bank then you have to pay the dividend (caps lock not required), but this is not a concern given that, as I mentioned in the previous post, this I don't think it's accurate to say that I "advocated shorting banks in 2010". My exact words were: Finally, I don't think the 10-year bond yield is an appropriate choice for the risk-free rate. Its yield is much higher than shorter-dated maturities, due to term risk. A more appropriate choice would be the RBA cash rate. .
I don't believe m22au is a clueless moron, far from it and not everyone is a 100% correct genius. But it has me wondering about you...?
Good to see you are finally catching on that you are clueless on this topic. For example, this is what you said in post one in the year 2010 : " Australian housing prices are high and in bubble territory. However we know from previous bubbles (eg. Nasdaq late 1990s) that the mere existence of a bubble is not sufficient for prices to (1) stop rising and (2) start falling. " This statement was false and extremely misleading. It is intellectually dishonest of you to continue to push this theme. That puts you in the company of many others on here who have grossly misread many markets from 2009 to 2018, but it doesn't excuse you from being called out on it when you continue the charade.
The statement was true. In what way was it misleading? What theme do you believe am I "pushing" ? In what "charade" am I participating? As a general observation - you seem awfully preoccupied with posts I made in 2010. Why is this the case? .
Your statement was false and 8 years of data since confirms it. I have no idea what you think a "bubble" is; perhaps the lesson here is you are inexperienced and a slow learner.