Who would've guessed shares in Australia's 'Big Four' banks would've fallen so hard in 2015?
| Current Price | 12 Month SP Return | Year-to-date SP Return | Six Month SP Return | |
| CommBank | 73.35 | -10% | -13% | -24% |
| Westpac | 29.92 | -16% | -11% | -27% |
| NAB | 30.07 | -14% | -12% | -25% |
| ANZ | 27.3 | -22% | -18% | -29% |
| ASX200 | 5039 | -12% | -8% | -18% |
Source: Google Finance. SP = Share Price.
The above table shows the share price performance of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group (ASX: ANZ) and Westpac Banking Corp (ASX: WBC) over the past year, in 2015, and the past six months; compared to the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
As can be seen in the table, each of the big banks have underperformed the broader market in 2015.
Worst start since the GFC
In fact, on average, shares of the big four banks are on track to endure their worst year since the GFC, when they each recorded a share price fall of more than 35%…
Source: Yahoo! Finance
Is it time to short the banks?
For years, many writers here at the Motley Fool have said the big banks aren't cheap – it's been no secret.
But before you call us all brilliant, it's important to remember that each of the big banks have (slightly) outperformed the S&P/ASX200 over the past three years, so they're still winning investments – even more so with dividends included!
However, I do think the days of double-digit profit growth from the big banks are done and dusted, and over the medium term we could see a meaningful rise in bad debts. If my prognostications are correct, it'll impact the upside potential of their share prices.
But even though I am bearish on the banks at today's prices, there is absolutely no way I would 'short' any of them. Shorting involves betting on a downward share price movement.
Indeed, the reality is that each of the big banks are excellent businesses and will likely return to a decent growth trajectory once the economy gives them the opportunity.
Therefore, although none of them are a buy in my opinion, I probably wouldn't call them an outright sell for long-term focused investors either.
However, if you are overexposed to the sector, it may be a good idea to consider taking some profit (or losses!) off the table and transitioning into other – faster growing – dividend stocks…
