The Commonwealth Bank of Australia (ASX: CBA) share price and Pinnacle Investment Management Group Ltd (ASX: PNI) share price have performed exceptionally well.
Just take a look at this chart of CBA and Pinnacle shares over the past five years…
CBA and Pinnacle share price
As can be seen, it's been a great run for these two financial companies.
However, recently, I noted that Commbank and Pinnacle shares are too expensive to justify a 'buy' rating. Therefore, I'm waiting for their share prices to fall before buying in.
Commbank
Commonwealth Bank is Australia's largest bank. The formidable force in Australian banking, Commbank has achieved stellar growth over two decades of non-stop house price growth, rising wages, falling interest rates and net migration.
However, I find it difficult to imagine another two decades of recession-less growth in Australia. And with CBA shares trading at a premium valuation to its peers, I don't think the time is right to buy.
Pinnacle
Pinnacle is a much smaller company but has an impressive track record since the global financial crisis. Pinnacle teams up with fund managers to offer investors access to leading managed funds. The fund managers are high quality, making it easier for Pinnacle to grow the funds and clip the ticket on management fees.
At $2.81, Pinnacle shares are not cheap. But more concerning is the company's dependence on the economic cycle. As it collects fees based on the amount of money invested in their funds, Pinnacle's revenue are sensitive to changes in the financial markets.
For that reason, I think patient investors will get a better opportunity to buy Pinnacle shares, in time.
