The Federal Court has ordered Commonwealth Bank of Australia (ASX: CBA) to pay a $7 million fine for misleading and deceptive conduct.

As The Motley Fool reported in December, the Australian Securities and Investments Commission (ASIC) had taken the bank to court for overcharging interest on thousands of customers’ overdraft facilities.

Specifically the customers were told they would be charged 16% per annum, but CBA actually slugged them an eye-watering 34%.

This allegedly occurred over more than 6 years from December 2011.

CommBank did not defend the allegations of misleading and deceptive conduct and making misleading representations. The court found the bank liable in February.

CBA’s conduct was presented as a case study during the banking Royal Commission in 2018.

The bank’s shares were up 0.51% on Wednesday, trading at $86.47 when the ASX closed.  

CommBank took too long to fix the problem

While CommBank did not defend itself against the accusations, it did fight the size of the fine. Its lawyers debated in court that the financial giant should be penalised somewhere between $4 to $5 million.

ASIC had sought $7 million, and the justice ultimately sided with that suggestion.

According to earlier ASIC submissions, CommBank attempted to manually fix the error after a 2013 complaint. But this wasn’t successful and overdraft clients were charged more than double the correct interest for 5 more years, until March 2018.

In setting the fine, Justice Michael Lee rejected CommBank’s argument that it had acted promptly to reverse the error.

“When CBA failed to resolve this error after it was identified, customers were overcharged more than $2 million in interest,” said ASIC commissioner Sean Hughes.

“CBA’s delay in remediating customers following this error was an aggravating factor in the court’s determination of the penalty. When financial institutions discover overcharging, they must take immediate action to remediate impacted consumers.”

Rebuilding trust

The $7 million penalty was specifically for offences CBA admitted between 1 December 2014 to 31 March 2018.

More than 12,119 instances of overcharging took place in that period, affecting 1,510 customers.

A CBA spokesperson told The Motley Fool that “failures of this sort are unacceptable”.

“We apologise to those customers who at the time were overcharged fees,” said the spokesperson.

“The problems that caused the error have been addressed and 2,269 customers have been sent refunds. The combined total of refunds sent to customers was $3.74 million, and the remediation program has now concluded.”

Hughes said CommBank is currently “making investments in its systems as a matter of priority”.

“All financial services institutions should make similar commitments to rebuild trust in our financial system and to avoid further failures.”

The case will return to court at the end of this month to decide how a publication order would be implemented and who would pay for ASIC’s legal costs.

More reading

• Tesla and GameStop were some of the most popular US shares last week
• Why this top broker thinks the Woolworths (ASX:WOW) share price can break new record highs
• 2 ASX dividend shares to buy this April
• Commonwealth Bank (ASX:CBA) share price and weekly news wrap
• Top brokers name 3 ASX shares to sell today

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Ionic Rare Earths Ltd (ASX: IXR) share price was flying earlier today after the company announced a new partnership with a Chinese minerals’ explorer.

This morning, shares in the mineral exploration company were up 14.29% to hit a 5-year record of 6.8 cents each.

Since then, the Ionic share price has plunged the red, closing down 1.79%, at 5.5 cents. In comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) was up 0.5%.

Let’s take a closer look at Ionic’s new partnership.

What’s driving the Ionic share price?

In today’s release, Ionic announced it had signed a non-binding Memorandum of Understanding (MOU) with Aluminium Corporation of China subsidiary, Chinalco.

The MOU relates to Ionic’s rare earth’s project in Makuutu, Uganda. Ionic claims resources at the site cover an area of 20km to 37km and could have a timeframe of at least 30 years.

According to the release, Chinalco has conducted “extensive” due diligence works on the site over the past year. This includes assessing local infrastructure, drilling results, and Ugandan regulations. 

As part of the MOU, Ionic and Chinalco have agreed to use “reasonable endeavours” to cooperate in accelerating the development of the Makuutu project. As well, Chinalco may be able to invest in future Ionic projects, including direct investments in the Makuutu project. Chinalco is described as “the largest rare-earths miner and separator on the planet by market capitalisation”.

Most of the MOU is non-binding except for some provisions, and the exclusivity portion will expire in 12 months. Despite the exclusivity clause, Ionic reserves the right to continue discussions with third parties that began before the MOU was signed.

Management commentary

Ionic managing director Tim Harrison welcomed today’s announcement, saying:

We are very pleased to have signed this MOU which, further endorses the quality of the project and its strategic importance and will now enable the Makuutu Rare Earths Project to rapidly advance activities in the near term. 

We see Makuutu rapidly growing into a very large, long life producer of critical and heavy rare earths. Partnering with Chinalco potentially fast tracks the development process for Makuutu and will greatly assist in value creation for Ionic.

Foolish takeaway

The Ionic share price has gone gangbusters over the last 12 months increasing by 1,060%.

The price of many rare earth minerals has also climbed dramatically recently, as western nations look to secure their own supply of the vital metals.

Rare earth minerals have a variety of applications including magnets and super magnets, electronic equipment and batteries, according to Geoscience Australia.

More reading

• Tesla and GameStop were some of the most popular US shares last week
• Why the Bubs (ASX:BUB) share price is up 5% today
• PharmAust (ASX:PAA) share price soars 7% on positive update
• How are these ASX 200 retail shares tracking after JobKeeper’s end?
• 3 top ASX small cap shares that delivered for this fund’s portfolio

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Most weeks, Commonwealth Bank of Australia‘s (ASX: CBA) CommSec brokering platform tells us the ASX and US shares that are the most popular with its Aussie investors.

CommSec is one of the most popular brokerage platforms in Australia. As such, the data it gives us can be an interesting insight into what’s been on the mind of the average ASX investor.

My Fool colleague, James, has already looked at the most popular ASX shares last week today. So here are the top 10 US shares CommSeccers were buying last week. This week’s data covers 29 March to 1 April. 

GameStop shares among most traded US shares on the ASX

1. Tesla Inc (NASDAQ: TSLA) – representing 6.3% of total trades with an 80%/20% buy-to-sell ratio.
2. Apple Inc (NASDAQ: AAPL) – representing 2.5% of total trades with a 69%/31% buy-to-sell ratio.
3. GameStop Corp (NYSE: GME) – representing 2.2% of total trades with an 80%/20% buy-to-sell ratio.
4. Palantir Technologies Inc (NYSE: PLTR) – representing 1.9% of total trades with an 86%/14% buy-to-sell ratio
5. Nio Inc (NYSE: NIO) – representing 1.8% of total trades with a 75%/25% buy-to-sell ratio.
6. ARK Space Exploration & Innovation ETF (BATS: ARKX)
7. Microsoft Corporation (NASDAQ: MSFT)
8. ARK Innovation ETF (NYSE: ARKK)
9. 88 Energy Ltd (OTCMKTS: EEENF)
10. Amazon.com Inc (NASDAQ: AMZN)

What can we learn from these trades?

Some interesting insights this week. Firstly, while electric vehicle and battery manufacturer continues to hold its crown on top of this list, its Chinese rival Nio continues to slide. Nio has fallen on the n0. 4 stock last week to 5 this week.

Aussie investors are clearly not done with GameStop either, despite this roulette wheel of a stock falling 30% since 10 March. However, GameStop did pop 50% in one day back on 25 March, so perhaps investors are hoping for a similar event to cash out (or double down).

Apple remains popular with Aussies, while Amazon has resurfaced as a top 10 company following some recent investor apathy. It seems Aussies still see value in having two of the US’s largest companies in their portfolios.

Ark Innovation ETF has been a staple of this list for a while now. But another ARK exchange-traded fund in the Space Exploration & Innovation ETF joins the party this week. ARKX only started life on 30 March 2021, so clearly, Aussie investors don’t want to let this one go.

Finally, it’s worth noting the inclusion of 88 Energy. Perhaps an ASX first, 88 Energy Ltd (ASX: 88E) is actually an ASX company that is also an over-the-counter (OTC) stock (hence the strange ticker code) in the US and has clearly attracted some investors with its wild volatility of late. I’m not sure why ASX investors are trading this company on US OTC markets when they could get it here on the ASX, but there you go. 88 Energy shares were trading for 1 US cents a month ago, but shot up 700% between 11 March and 5 April, before falling more than 76% since. Ouch.

More reading

• This ASX ETF is smashing the ASX 200… and the S&P 500
• Is GameStop the next Blockbuster, Amazon, or Best Buy?
• Tesla stock could surge 51% to $1,000 according to this analyst
• Amazon just passed a major milestone in the digital advertising market
• Why this top broker thinks the Woolworths (ASX:WOW) share price can break new record highs

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Microsoft, NIO Inc., and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Palantir Technologies Inc and recommends the following options: long January 2022 $1920 calls on Amazon, short March 2023 $130 calls on Apple, short January 2022 $1940 calls on Amazon, and long March 2023 $120 calls on Apple. The Motley Fool Australia has recommended Amazon and Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is having a fabulous day today, up 0.51% to 6,921 points, a new 52-week high for the index. But the Bubs Australia Ltd (ASX: BUB) share price is doing one better. Putting the fab in fabulous, Bubs shares are up 5.15% at the time of writing to 51 cents a share. This rise puts Bubs close to 11% from the lows we saw just last week, when Bubs hit a new 52-week low of 46 cents.

As that low implies, it’s not such a good view of Bubs if we zoom out. Back in May last year, this was a company that hit $1.19 a share, which was pretty impressive at the time considering COVID lockdowns were still in full swing.

It has been lower and lower for Bubs ever since.

So what’s causing this bump today? And have Bubs shares perhaps turned a corner?

Turning the corner?

So it’s worth remembering that Bubs, like many ASX companies, was hard hit by the coronavirus pandemic. A large part of Bubs growth in recent years has come from the daigou supply chain, which involves mostly Chinese buyers reselling products to the Chinese market. These supply lines ran largely through tourism, which of course has all but dried up over the past year. As such, Bubs recorded a 23% drop in gross revenues in its earnings report for the first half of the 2021 financial year (1H21). As a result, Bubs also recorded an earnings loss of $14.4 million for the half, significantly above the $5.3 million loss for 1H20.

However, there are signs that Bubs is turning things around. In a quarterly update for the period ending 31 December 2020, Bubs told investors that revenues were up 36% compared to the quarter ending 30 September 2020. That implies that a significant recovery may be underway.

Of course, that was all reported to the markets a month or two ago. So it’s unlikely to be affecting the company share price today. But that undercurrent may still be important.

Bargain hunting at Bubs

Perhaps the most likely force driving Bubs’ share price higher today is its most recent low. Bubs has made a name for itself as an ‘ASX growth share to watch’ over the past 5 years or so. Remember Bubs climbed more than 200% between January and May 2019. We could just be seeing some bargain hunting going on. When a company make a new 52-week low, it tends to get some attention from value investors. We are seeing similar bounces in other ‘oversold ASX growth shares this week as well. These include Afterpay Ltd (ASX: APT) and A2 Milk Company Ltd (ASX: A2M).

Whatever the cause, Bubs shareholders would probably be pleased with what the market has given out today.

More reading

• Pivoting from infant formula, what’s next for the Jatcorp (ASX:JAT) share price?
• 88 Energy and Airtasker were among the most traded ASX shares last week
• ASX stock of the day: Tassal Group (ASX:TGR) shares rise 5%
• Nova Minerals (ASX:NVA) share price sinks as gold estimate grows
• Is there more pain ahead for the a2 Milk (ASX:A2M) share price?

Sebastian Bowen owns shares of A2 Milk. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BUBS AUST FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The PharmAust Limited (ASX: PAA) share price is shooting upwards following an update on its antiviral program. In late afternoon trade, the PharmAust share price is trading for 11 cents apiece, up 7.1%.

What did PharmAust announce?

Investors are pushing PharmAust shares higher after taking in the company’s progress on antiviral activity against COVID-19.

In its announcement, PharmAust provided an update on its lead drug candidates as antiviral therapeutics. These include monepantel (MPL) and also monepantel sulfone (MPLS).

The company stated that data from extensive testing at Leiden University Medical Center (LUMC) has demonstrated antiviral activity in non-human primate systems. This follows two previous independent laboratories that conducted MPL’s antiviral activity in both primate and non-primate cell cultures mid-last year.

MPL and its metabolite MPLS are potent and safe inhibitor of the mTOR pathway. This is the pathway that influences cancer growth, neurodegenerative diseases, and viral infections. MPL has been evaluated in the human phase 1 trial and exhibited preliminary evidence of anticancer activity.

PharmAust noted that solubility issues of MPL in the in-vitro systems remain challenging. However, it has resolved solubility issues of the administration to patients through developing an MPL tablet dosage form.

When consumed, MPL is converted to MPLS in the body, representing the dominant form in a person’s plasma.

Principal investigator at LUMC, associate professor Martijn van Hemert commented:

There are indications for an antiviral effect in these assays, but solubility issues under the conditions required for cell-based screening complicate analysis. Additional experiments will now be performed on SARS-CoV-2 infected human lung cell lines

PharmAust Chief Scientific Officer, Dr Richard Mollard added:

Testing highly insoluble drugs such as MPL in established complex culture conditions is notoriously difficult. We look forward to updating the market as these programs continue.

PharmAust and LUMC will seek to move its antiviral development program to testing in human cells.

PharmAust share price snapshot

Over the past 12 months, the PharmAust share price has accelerated over 50% of its value. Most of the gains came from June 2020 when the company announced its preliminary COVID-19 results.

On valuation grounds, PharmAust presides a market capitalisation of around $33.2 million, with 316.7 million shares outstanding.

More reading

• How are these ASX 200 retail shares tracking after JobKeeper’s end?
• 3 top ASX small cap shares that delivered for this fund’s portfolio
• Why the Whispir (ASX:WSP) share price is sinking today
• Big Four Banks. Big Gains?
• Will China’s great emissions wall crash the Bitcoin price?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Do you remember all the investor handwringing over the looming end of JobKeeper?

How the end to the government’s COVID-19 worker and employer support program would send the share prices of leading S&P/ASX 200 Index (ASX: XJO) listed retail shares spiralling lower?

Well, it’s now been 6 trading days since JobKeeper came to an official close on 28 March. (Remember, the ASX was closed on Friday and Monday for the Easter holiday.) And 2 of the leading ASX 200 retail shares indicate the doomsayers may have been channelling their inner Chicken Little, at least in this short period.

We’ll look at those to retail shares below. But first…

Not everyone was surprised by the resilience of the ASX 200 retail sector.

In the days just before JobKeeper wound down, 1851 Capital portfolio manager’s Martin Hickson said (quoted by the Australian Financial Review):

We aren’t concerned around the end of JobKeeper. We have already been through the large step down in JobKeeper at the end of September when the number of Australians on JobKeeper went from 4 million to 1 million. Over that period the economic data actually accelerated.

Alphinity Investment Management principal Andrew Martin agreed, saying:

We’re not too worried about the end of JobKeeper. The banks are a good proxy for the domestic economy and they’re feeling much better about the world. The average person is still feeling pretty well off, interest rates are low, people’s house prices are going up and all that is only good for spending.

Martin did add the caveat that ASX investors shouldn’t expect the same growth level as during the early months of rebound following the broader market crash last year. “You’re not going to see the same retail sales growth rates you saw last year, but it also won’t fall in a heap.”

Two leading ASX 200 retailers

Narrowing our focus to 2 leading ASX retail shares, we turn first to online and in-store electronics retailer JB Hi-Fi Ltd (ASX: JBH).

The JB Hi-Fi share price, down o.7% in afternoon trade today, is up 14% over the past month. That compares to a 3% gain on the ASX 200. Since the opening bell on 29 March, following the end of JobKeeper, JB Hi-Fi shares are up 0.3%.

JB Hi-Fi has a market cap of $6 billion and pays a dividend yield of 5.3%, fully franked.

Next up, ASX 200 retail giant Wesfarmers Ltd (ASX: WES), which holds big-name subsidiaries including Bunnings Warehouse, Kmart Australia, and Officeworks.

The Wesfarmers share price is up 8% over the past month and up 2% since JobKeeper ended on 28 March.

Wesfarmers has a market cap of $60.5 billion and pays a dividend yield of 3.1%, fully franked.

More reading

• Will the Kogan (ASX:KGN) share price making a comeback in April?
• 2 great ASX 200 blue chip shares for dividends
• 2 major ASX retail shares trading near record highs
• These are the 10 most shorted shares on the ASX
• Top brokers name 3 ASX shares to sell next week

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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There are a few top-performing small cap ASX shares that delivered strong performance in March 2021 that helped the 1851 Emerging Companies Fund outperform its benchmark.

What’s 1851 Emerging Companies Fund?

It’s a fund that invests on small cap companies outside of the S&P/ASX 100 Index (ASX: XTO). The 1851 Capital fund typically invests in 30 to 80 small cap ASX shares to try to beat the S&P/ASX Small Ordinaries Accumulation Index.

1851 Emerging Companies Fund has been a very strong performing fund since inception after it launched just before the COVID-19 crash. Since inception in February 2020, the fund has delivered a net investment performance per annum of 28.6%. That’s after all fees and expenses. Over the last year, to 31 March 2021, its net return was 100%.

At the end of March 2021, the five largest positions were Uniti Group Ltd (ASX: UWL), Capitol Health Ltd (ASX: CAJ), Frontier Digital Ventures Ltd (ASX: FDV), PSC Insurance Group Ltd (ASX: PSI) and Pinnacle Investment Management Group Ltd (ASX: PNI).

The fund’s net return of 1.1% in March 2021 was able to beat its benchmark’s return of 0.8%, partly thanks to these three shares:

Eureka Group Holdings Ltd (ASX: EGH)

The Eureka share price climbed 21% in March 2021. 1851 Capital explained that the business continued its rally after a strong result in February 2021.

In the result, the small cap ASX share reminded investors that its revenue streams are economically stable and highly resilient, with government pensions underpinning around 95% of revenue. It has 97% occupancy.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up 27% to $5.23 million, underlying profit before tax grew 39% to $3.57 million and net operating cashflow increased 16% to $4.05 million.  

1851’s investment team are impressed with the ASX share’s new board and management at the company who have sent an “impressive” platform for growth in the senior independent living sector.

People Infrastructure Ltd (ASX: PPE)

The People Infrastructure share price went up 18% last month. 1851 Capital attributed this rise to the “solid” result and return of the former CEO.

The small cap ASX share saw revenue growth of 3.1% to $201 million and normalised EBITDA rose 49.3% to $21 million. Normalised net profit after tax and before amortisation (NPATA) grew 51.5% to $13.7 million and NPATA per share grew 19% to 14.8 cents.

People Infrastructure is expecting to grow its normalised EBITDA to between $35 million to $37 million in FY21.

The business continues to look at both the opportunity to grow organically into new sectors as well use its acquisitions that would accelerate that growth.

Pentanet Ltd (ASX: 5GG)

Perth-based telecommunications business Pentanet saw its share price increase 20% over the month. 1851 Capital pointed to strong subscriber growth and optimism around the cloud gaming launch.

On 27 January 2021, the small cap ASX share commenced online registrations of interest by allowing future Australian users of GeForce NOW to reserve their usernames and register for an invitation to the beta program.

Since that announcement, over 24,300 gamers have registered. This level surpassed initial business case expectations and provided strong confidence to scale up its initial launch plans.

Pentanet has proceeded with the placement of an initial hardware order with NVIDIA in line with the cloud gaming strategy. It is buying 18 RTX game servers at an approximate capital cost of A$3.2 million. The aim is to roll out the beta offering this year, with a commercial to launch after that.

More reading

• Leading broker names its best ASX share ideas for April
• Uniti (ASX:UWL) share price on watch following bullish broker note
• Top broker picks the best ASX shares to buy for the new quarter
• 2 ASX dividend shares to buy
• Brokers think these 2 top ASX shares are buys in April 2021

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Frontier Digital Ventures Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of People Infrastructure Ltd. The Motley Fool Australia has recommended Frontier Digital Ventures Ltd and People Infrastructure Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Whispir Ltd (ASX: WSP) share price is under pressure on Wednesday.

In afternoon trade, the communications workflow platform provider’s shares are down 3% to $3.42.

This compares to gains of 0.6% by the S&P/ASX 200 Index (ASX: XJO) and 0.8% by the  S&P/ASX All Technology Index (ASX: XTX).

Why is the Whispir share price sinking?

Today’s decline appears to have been driven by an announcement released by Whispir this afternoon.

According to the release, the company’s Chief Financial Officer, Justin Owen, has handed in its resignation less than a year after joining the company.

Mr Owen intends to remain in the role until the middle of August and will oversee the completion of the company’s FY 2021 full year results. He will also ensure a smooth transition to his successor.

In the meantime, Whispir advised that it has initiated a global executive search for a new Chief Financial Officer. It will announce a replacement following the completion of this process.

The company notes that Justin Owen joined Whispir as Chief Financial Officer in June 2020 and oversaw the company’s global finance function during the initial phases of COVID-19 impacts.

Over this time, he has supported the company in a number of equity events. This includes the recent $45 million capital raising and the streamlining and strengthening of its core financial capabilities.

Whispir’s CEO, Mr Jeromy Wells, said: “We thank Justin for the contribution he has made to Whispir and its growth as a leading ASX technology company, placing it in a strong position to capitalise on its future growth plans. We wish him well with his future endeavours.”

Is this a buying opportunity?

One broker that might see the weakness in the Whispir share price as a buying opportunity is Ord Minnett.

Last month the broker put a buy rating and $4.25 price target on the company’s shares. This price target implies potential upside of 24% over the next 12 months.

More reading

• 2 of the best small cap ASX shares to watch
• These ASX tech shares are all trading near their lowest prices in months
• 2 of the best small cap ASX shares to buy
• 2 exciting small cap ASX shares with huge growth potential
• Brokers name 2 exciting small cap ASX shares to buy

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Whispir Ltd. The Motley Fool Australia has recommended Whispir Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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I have a question for you, based on an upcoming article I’ve written for Money Magazine. What do you reckon was the average share price return for Australia’s Big Four banks over the five years to December 2020?

While you’re thinking, I’ll give you a hint: The ASX 200 gained about 24% over the same timeframe.

Still not sure?

Here’s an alarming stat: The worst performing Big Four bank, over that time, was down 48% (yes, fourty-eight!).

Still thinking?

Want the number for the best performing back to help you frame up your guess?

-4%

Yes. Minus 4.

Here’s the tale of the tape:

Westpac: -42.3%
NAB: -25.2%
ANZ: -18.8%
CBA: -4.0%

Bottom line: Not one of the Big Four Aussie banks delivered a positive share price return between January 1 2016 and December 31, 2020.

And if you held all four in equal parts, your return was -22.6%. Remember, the ASX was up 24.4% over that same timeframe.
You would have underperformed the index by 47 percentage points.

Ouch.

Now, I don’t want to pile on, here.

I know many of our readers and some of our members own banks. Some of you own a lot of them. For many long term bank shareholders, they might make up 40%, 50% or 60% of your portfolios. Maybe more.

I’m not here to kick an investor when they’re down.

And I’m not revelling in your misfortune.

But I do want to give you a little tough love. See, I’ve been saying, for a long time, that I think the banks’ best days are behind them. Industry consolidation is done. Interest rates are as close to zero as any of us should hope to see. House prices are through the roof.

The length of a standard new mortgage has increased from 25 to 30-year terms. Second incomes have inflated our ability to pay. Innovators and disruptors are nibbling away at the most profitable products.

…

The banks have had a stellar run.

They’ve done wonderfully.

But I think we’ve seen the best. Famous last words? Maybe. But ask yourself: Where does the next decade of profit growth come from? Which of the above tailwinds, now stopped, will start blowing again? What others will turn up? Because I’m buggered if I know.

I just can’t see it. Maybe I’m wrong. But ask yourself what’s more likely: Will the three-decade-long tailwinds suddenly start blowing again, just as strongly? Or will the good ship SS Australian Banking be sitting, listless, in becalmed waters in future?

I think it’s probably the latter.

And let’s take this a step further.

Even if I’m wrong, are they really likely to be the ASX’s best performers over the next decade?

Nah, I don’t think so either.

(And if you’re thinking ‘yeah, but the Capital Gains Tax’, have another look at the difference in gains from those banks and the index between 2016 and 2020. You could have essentially paid CGT at the top concessional rate in 2016, bought an index fund, and you’d have had a lot more, five years later, even after paying the taxman.)

Look, as I said, I’m not here to rain on anyone’s parade.

And I’ve made my share of investing mistakes, so I’m sure as hell not throwing stones from my little glass house. I’m just asking you to imagine what the future might look like, based on the prevailing economic and business conditions, for banks in particular, and the rest of the market in general.

Don’t you, deep down, think I might be right? Should you sell the banks? That’s a call you have to make for yourself. But I think it’s a question you need to ask.

You don’t need to suddenly buy speculative rubbish. You don’t have to abandon sensible, thoughtful, long-term investing.

In fact, quite the opposite.

You need to embrace it.

And you need to look for tomorrow’s winners, not yesterday’s. The Big Four banks were certainly among the latter for many years. But I don’t know they’ll be atop the list of the former. The economic and market recovery of the past few months has been good to the banks.

Maybe… just maybe… now is the right time to think about what you should own, instead…

More reading

• Will China’s great emissions wall crash the Bitcoin price?
• 3 reasons Bitcoin could double your money (and more)
• Pivoting from infant formula, what’s next for the Jatcorp (ASX:JAT) share price?
• Leading broker names its best ASX share ideas for April
• Up 940% since last year: What’s with the EcoGraf (ASX:EGR) share price?

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Bitcoin (CRYPTO: BTC) price is down 1.4% over the past 24 hours. However, it’s still almost doubled in value so far in 2021. One Bitcoin is currently worth US$58,017 (AU$75,347).

According to data from CoinDesk, US$61 billion worth of Bitcoin changed virtual hands over the last full day.

And therein lies a potential pin to deflate the Bitcoin price in a world that’s racing to decarbonise.

Bitcoin’s China problem

How do Bitcoin transaction volumes impact greenhouse gas emissions? And what’s all this about China?

I was hoping you’d ask.

First, if you’re not aware, Bitcoin uses something called the blockchain. Essentially, it runs by a series of unaffiliated computer jockeys to verify and process every transaction. You’ll hear this called Bitcoin mining. This occurs as the people or companies running the computers are paid for their efforts with, you guessed it, Bitcoin.

Second, as of this time last year, China accounted for approximately 75% of the world’s Bitcoin blockchain transactions. That’s largely due to the Middle Kingdom’s lower energy costs. Consequently, (greenies, you may wish to look away) analysts say is partly due to the nation’s prevalence of cheaper coal-burning power plants.

The problem is this. Many years ago in Bitcoin’s infancy, you may have been able to do a spot of mining with a powerful home computer. However, now the companies behind the bulk of Bitcoin transactions run massive computer networks. Consequently, hoovering up astounding amounts of energy in the process.

How much energy does Bitcoin really use?

As reported by Bloomberg, according to a research study at the University of Chinese Academy of Sciences, Cornell University, Tsinghua University and the University of Surrey, Bitcoin blockchain operations are “projected to peak in 2024 at around 297 terawatt-hours, generating 130 million metric tons of carbon emissions”.

And that means:

China’s energy consumption from Bitcoin mining in 2024 will exceed the total energy consumption level of countries like Italy and Saudi Arabia, the study said, and the carbon emissions will exceed the annual greenhouse gas emissions outputs of countries including the Netherlands, Spain and Czech Republic.

Twenty years ago, when most of the world was merely paying lip service (at best) to the concept of global warming and carbon reduction, these figures would have mattered little.

Today it’s a vastly different playing field. Global carbon mitigation efforts and cross-border legislation are likely to become more stringent rather than less over the coming years.

Global and domestic concerns have already seen Chinese President Xi Jinping sign onto the Paris Agreement. China has agreed to hit peak carbon output by 2030 and be carbon neutral by 2060.

While 2030 is still some time off, the move to curb emissions may well Chinese regulators descend upon the nation’s multitude of Bitcoin miners.

According to the researchers mentioned above:

Without appropriate interventions and feasible policies, the intensive Bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort taking place in the country.

Depending on how Chinese regulators approach the matter, Bitcoin could be in for some major disruptions.

More reading

• 3 reasons Bitcoin could double your money (and more)
• Bitcoin price mania spreads as Ether price hits record highs
• What’s driving the Bitcoin price back towards new record highs?
• Goldman Sachs plans to let wealthy clients invest in Bitcoin
• ASX 200 Weekly Wrap: ASX 200 gets its mojo back

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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