I have been saying this for years now: if more than 30% of my portfolio was invested in Commonwealth Bank of Australia (ASX: CBA) and the other major Australian banks I would consider selling part of my holding.
But, you try telling a bank shareholder to "sell" when this has happened…
CBA share price
And that's only since 1999!
Commonwealth Bank shares went public in the early 90's for less than $6. They are trading at $76 today — and pay around $4.30 in yearly dividends!
Normally, telling an investor their shares are a 'sell' is like telling them their child is ugly.
But when that kid has won share price gold medals for 26 years and graduated into the ASX dividends hall of fame, it's akin to saying, "congratulations" to someone that's not pregnant.
Nevertheless, I'm going to wear it and get candid with you…
If you are carrying around more than 30% of your portfolio in Aussie bank shares, it's time you lightened the load.
Why?
Because it appears to me that the five-year potential return of the major bank shares may be outweighed by the risks at a ratio of around two-to-one.
I have said for a few years now that I would not buy CBA shares, but I would have been happy to hold them.
However, now, looking towards 2018 and beyond, it may be time to consider trimming some of the fat.
Don't get me wrong I too would like to own Aussie bank shares.
But I can't bring myself to do it.
That's why I invested abroad and bought shares in an American and European bank (which also operates in Australia).
They pay great dividends, lower my exposure to the sluggish local economy and in my opinion they offer longer-term growth potential. As a bonus, the shares appear cheaper!
Foolish Takeaway
I'm on record as having no love lost with big bank shares at current prices, including Commbank, Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ).
I think each of these companies is likely to grow over time. But put simply, I think there are better places for at least some of your money over the next 10 years.
