Should you buy the big four banks today?

Commonwealth Bank of Australia (ASX:CBA), Westpac Banking Corp (ASX:WBC), Australia and New Zealand Banking Group (ASX:ANZ) and National Australia Bank Ltd. (ASX:NAB) are tumbling, and investors seem nervous about catching them.

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The big four banks are once again acting as a drag on the overall Australian stock market with the S&P/ASX 200 (INDEXASX: XJO) having now tumbled below the 5,300 level.

Commonwealth Bank of Australia (ASX: CBA) has dropped a further 0.4% with its shares trading below $75, while Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group (ASX: ANZ) have fallen 0.6% and 0.5% respectively. National Australia Bank Ltd. (ASX: NAB) has fallen even more heavily with its shares down 0.9% for the day.

What's happened?

When the stock market was rampaging higher, the talk of the town was how good the banks were. Their juicy, fully franked dividends and their 'defensive' natures attracted investors from around the globe, driving them to all-time or multi-year highs. Any bearish comments directed at the companies were not well received with many investors suggesting they were still the stocks to buy.

However, it now seems that reality has hit home. The big four banks had become wildly overpriced and there is a lot more to consider than just their tantalising dividends.

Indeed, foreign investors are heading for the exits en masse, preferring the outlook for the US economy over our own. A plummeting dollar and iron ore price have not helped the banks' cause either with three of the major banks having now entered a "technical correction".

In addition, investors have also become concerned by the Reserve Bank's sudden backflip on the red-hot property sector. While they had previously suggested rising prices were not an issue, it now believes that "the composition of housing and mortgage markets is becoming unbalanced." Given the big four banks' exposure to the sector, they could be amongst the heaviest to fall should cracks start to appear.

Should you buy the banks?

Although the big four banks have fallen heavily in price, they are still not trading at an attractive enough price to tempt me. While I would love a slice of their glistening dividends, I believe there are far greater opportunities on offer.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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