Commonwealth Bank of Australia (ASX: CBA) catapulted itself to a new all-time high yesterday with shares rising 29c or 0.3% to $81.60 apiece. Yesterday's jump takes the bank's overall gains for 2014 to 4.9% while the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has risen a more modest 3%.
Although Australia's largest banks continue to lead the overall market higher, investors need to approach with a high level of caution. While the big four were once amongst the safest investments for investors, they are now priced for perfection and look set to underperform (or even fall) over the medium-to-long terms.
After all, their dividends are no longer as appealing, volume growth is becoming more and more difficult to find while competition is also becoming more of an issue. Further, Commonwealth Bank's heavy exposure to Australia's housing sector is also a key risk.
Commonwealth Bank's rivals, namely Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ), are just as risky. Westpac and ANZ are also hovering around all-time highs while NAB is trading on an excessive P/E ratio of 13.
