BFC3540 Investment Debates – Week 3 – MQG & NAB

So we received a question asking if we’re going to put up articles for the banking sector. I rolled my eyes because the banking sector is so dead-ass boring.

In my “Portfolios and Weights 101” article – I gave the 6 stocks a quick “identity” for how they behave. Just to make your life a bit easier.

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Portfolios and Weights 101

So the ASX200 was up 0.3% last week. Let’s look at the points above, and see if their “identities” moved in line with the market.

  1. NAB – up 0.84% so pretty much in line with how the market moved
  2. MQG – up 2.66% so a much more significant move, I noted NAB for a -/+ 1% and MQG for a -/+1.5% move, so with MQG being the more volatile stock, it did move in line with expectations
  3. SYD – down 2%, in line with sector specific news with the US10Y edging upwards
  4. TCL – down 0.36%, same as the market, and in line with sector specific US10Y movement
  5. A2M – up 3.75%, and again, I marked A2 moving x2 – 3 times the amount the banks do, so in line with expectations
  6. TWE – down 1%, a bit of an anomaly here, but it “somewhat moves with the market”

So all the stocks to some extent follow their given “identities” (this identity thing isn’t like a textbook thing I’m just making it up, but it works so …). And this is certainly something you want to highlight as part of your debates – some stocks move with the market, some move more strongly, some are influenced by other factors (US10Y) etc.

So how do you go about your debates for banks?

I’m a pretty big fan of MQG, in my previous articles you can see a fair bit of talk about their operations and growth. Continue to talk about MQG’s operations, their business segments, perhaps how they are different to generic banks and why their diversification will allow them to outperform.

NAB is quite difficult to differentiate from the other big banks (I’m just saying that because I can’t be bothered crunching the numbers and looking for an edge out of four giants that will pay me a decent dividend but struggling to cope with our current household debt figures, weakening property market, slow wage growth, royal commission investigations, rising interest rates etc. – there are bigger fish to fry).

You can touch on all the points above, and the most sensible move would be to abstain from investing in NAB.

As noted in previous articles, if you feel like the market could have a good week (e.g. perhaps economic figures are coming out, employment figures coming out, you feel like Trump/China tensions are dying, you feel like the markets are oversold etc.) then the banks would be something to LONG.

It’s been a pleasure writing, and I will release one more article discussing how the stock debates were incorporated to the BFC3540 EXAM (I did the unit last semester and 25% of the exam was debates related). Not to say that it will be the same this time round, but better prepared than sorry 🙂