Investing

shorting Canadian Banks

[OP]
Member
Dec 30, 1969
322 posts
93 upvotes
Hampstead, QC

shorting Canadian Banks

In my opinion is one of the safest trades out there. My targets have been RBC and TD as have been short for a year now.
Deutche Bank looks like its about to rollover and will likely have to issue more shares shortly to increase their liquidity...the party has started.
Oil exposure both direct and indirect is a very big deal and while the share price has fallen, it has a ton more to go down IMO.
Take a look at this wonderful article by Zerohedge yesterday:


http://www.zerohedge.com/news/2016-02-0 ... -one-chart
749 replies
Deal Addict
Nov 24, 2013
3531 posts
738 upvotes
Kingston, ON
Seems spammy. Should move to investment forum at the very least.
Deal Addict
User avatar
Jan 4, 2009
3303 posts
583 upvotes
on the links
leflower wrote:
Feb 9th, 2016 8:16 am
In my opinion is one of the safest trades out there. My targets have been RBC and TD as have been short for a year now.
Let us know how it turns out for you, Axe.
Deal Fanatic
Feb 15, 2006
6395 posts
1177 upvotes
Toronto
leflower wrote:
Feb 9th, 2016 8:16 am
In my opinion is one of the safest trades out there. My targets have been RBC and TD as have been short for a year now.
Deutche Bank looks like its about to rollover and will likely have to issue more shares shortly to increase their liquidity...the party has started.
Oil exposure both direct and indirect is a very big deal and while the share price has fallen, it has a ton more to go down IMO.
Take a look at this wonderful article by Zerohedge yesterday:

http://www.zerohedge.com/news/2016-02-0 ... -one-chart
Should this type of speculation posts be here?
[OP]
Member
Dec 30, 1969
322 posts
93 upvotes
Hampstead, QC
In my opinion is one of the safest trades out there. My targets have been RBC and TD as have been short for a year now.
Deutche Bank looks like its about to rollover and will likely have to issue more shares shortly to increase their liquidity...the party has started.
Oil exposure both direct and indirect is a very big deal and while the share price has fallen, it has a ton more to go down IMO.
Take a look at this wonderful article by Zerohedge yesterday:


http://www.zerohedge.com/news/2016-02-0 ... -one-chart
Member
Aug 14, 2010
300 posts
89 upvotes
Toronto
Haven't you been going on and on and on over the past few months about shorting the Canadian banks....and now a thread about it. And a zerohedge thumper to boot, surprise surprise. Let me take a wild guess on how you think things are going to turn out. FED's next move is a rate cut, US economy falls into a recession, another round of QE very soon, negative interest rates AND you LOVE gold. Did I nail it?

I'm pretty sure oil loans account for less than 5% of any of the big five's overall outstanding loans. If someone were to buy Canadian bank shares today and hold it for 20 years, I think they would come out of it with a decent return.

Good Luck with the shorts.
Member
Dec 30, 1969
478 posts
232 upvotes
Burlington, ON
emanon86 wrote:
Feb 9th, 2016 11:41 am
I think they would come out of it with a decent return.
Especially when you start from such a low P/E, like we have now. Buying banks now with a long term mindset is likely to generate superior returns.
Deal Addict
Dec 6, 2006
3354 posts
486 upvotes
Toronto
I guess you can short pretty much any thing in TSX and be profitable lately lol
[OP]
Member
Dec 30, 1969
322 posts
93 upvotes
Hampstead, QC
well, YES I have...and I have been correct.
While I have been short for a year now, for those that want to make money being short....they are still early to the game. I am long miners and gold but this has NOTHING to do with my short in the 2 banks I mentioned...Indirect exposure to oil is way bigger than 5%, closer to 20% IMO.
Its easy money to short them.
Deal Addict
Dec 30, 1969
1138 posts
341 upvotes
Calgary, AB
leflower wrote:
Feb 9th, 2016 1:43 pm
well, YES I have...and I have been correct.
While I have been short for a year now, for those that want to make money being short....they are still early to the game. I am long miners and gold but this has NOTHING to do with my short in the 2 banks I mentioned...Indirect exposure to oil is way bigger than 5%, closer to 20% IMO.
Its easy money to short them.
Elaborate on your thesis please?

For a 20% loss, you're looking at a hole the size of Alberta's economy. Is all of Alberta going to disappear tomorrow?

Wouldn't it make more sense to short banks with a heavier exposure to the O&G sector? Like BNS and NA? or CM?

Or wouldn't it make even more sense to short banks with an even heavier exposure like the American ones?

I don't excel in speculation so I can't tell you whether you'll be right or not but am having lots of trouble understanding your thesis.
[OP]
Member
Dec 30, 1969
322 posts
93 upvotes
Hampstead, QC
I never said 20% loss...I said 20% indirect exposure. Oil and gas doesn't only affect Alberta as there is a huge trickle down effect in the economy. This is my thesis for Canadian banks.
This is a forum for investing and I am simply on the opposite side of the majority at the moment ( and winning )
Deal Addict
Jun 27, 2007
2811 posts
432 upvotes
how do you hedge shorts?
what is your plan regarding dividends? they are pretty high as is
finally, look at US traded shares, they are pretty beaten up (RY @48, TD @36).

While I could agree in principle banks could be shortable, it's not an easy walk by any means
After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!
Deal Addict
Dec 30, 1969
1138 posts
341 upvotes
Calgary, AB
leflower wrote:
Feb 9th, 2016 2:01 pm
I never said 20% loss...I said 20% indirect exposure. Oil and gas doesn't only affect Alberta as there is a huge trickle down effect in the economy. This is my thesis for Canadian banks.
This is a forum for investing and I am simply on the opposite side of the majority at the moment ( and winning )
That's what I am referring to. A 20% indirect exposure would imply exposure the size of Alberta's economy which, at a glance, would be incorrect. Oil and Gas is primarily just Alberta with Saskatchewan and small projects in the east coast.

Also, what's the nature of this indirect exposure? Retail? Consumer loans? Cars? Credit?

You have every right to be on the opposite side of the majority, provided you have solid reasoning.
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