I thought I would dedicate this newsletter to an undervalued sector globally, financials. Interestingly while global banks seem to be very cheap and attractive opportunities, Australian banks are quite the opposite… I start to worry when I read about 300sqm knockdowns in Sydney selling for $2.7m, $1m over the reserve (yes that happened last weekend in Double Bay). Investors in Australian banks should worry too. Sydney house prices are now over 50% above the pre-crisis level and the size of a mortgage has increased 2x greater than income since 1984. According to my friends at finder.com.au 29% of household income now goes towards paying a mortgage, which is historically very high. Growing debt fuels asset prices, as does the cost of debt. So when interest rates eventually rise, this will be a problem for Australian banks as bad debts will probably start rising, hitting their earnings. My full newsletter provides further discussion on the domestic banks and the undervalued opportunity in global stock exchanges and banks like Lloyds and Wells Fargo. Full report: (VIEW LINK)