What Happened to CBA?

In the past 12 months, CBA’s share price has climbed from $127 to $191 — a 50% gain.

Impressive, right?

And you’re probably thinking… “I should’ve bought some.”

Not so fast, tiger.

According to Morningstar — one of Australia’s most respected research houses — CBA’s fair value is closer to $90.

That suggests it’s trading at twice what it’s worth… and is vulnerable to a 50% correction.

And even if you bought CBA a year ago at $127, you were still overpaying by around 40%.

But it gets better… or worse.

CBA’s current dividend yield is just 2.6% — well below the 5–6% we’d typically expect.

So what does all this mean?

It means CBA’s not a smart buy.

Here’s why:

Right now, you can earn 3.6% on a 12-month term deposit with CBA — with zero risk.

But buy CBA shares, and you’ll cop a lower return (2.6%) and a truckload of volatility.

Simply put, investors are paying $2 for every $1 of value — and getting a smaller return than a CBA term deposit.

So why are investors piling into the market at all-time highs?

Some believe the worst is behind us after the tariff tantrums in March and April.

But nothing’s really changed — including Trump’s nickname on Wall Street…

TACO: Trump Always Chickens Out.

Every time he threatens another tariff, he backs down.

Right now, these markets are amongst the most expensive in history.

And just to be clear — I’m not picking on CBA or suggesting there’s anything wrong with the bank itself.

I’m simply saying: there’s a long list of companies trading miles above fair value. Many — like CBA — could fall 40–50% in a proper correction.

I just picked a market darling and household name to make the point.

So if you’re wondering what to do…

You’re probably better off leaving your money in the banks than buying them.

Have a great weekend,

Adam

Back paddock – a parent is only as happy as their unhappiest child.