Betting against the bank. ‘Widow-maker’ trades are making a comeback

August 17, 2026 — 5:00am

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In the hedge-fund world, betting against the big Australian banks is known as a “widow-maker” trade. This is finance slang for an investment move that looks sensible in theory, but has a long history of inflicting hefty losses on those who try it.

For years, the “bearish” case against investing in Australian bank shares has been built on the claim that our housing market is a debt-fuelled bubble, and that this leaves the banks that prop it up vulnerable. For years, betting against bank shares (especially the biggest, Commonwealth Bank) has generally not paid off.

Yet lately, banking bears have been growing in number, and you can see this in the number of people “short-selling” (a trading strategy where people bet on, and profit from, a falling share price).

Short positions in Commonwealth Bank have jumped from about 0.6 per cent of its shares last September to more than 2 per cent, according to the website Shortman, which draws on data from the Australian Securities and Investments Commission.

Short positions in Westpac, the second-largest mortgage lender, have risen a similar amount over this period to slightly less than 2 per cent.

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That is hardly the only sign of more people taking a more gloomy view on banks. Much of the analyst........

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