Investing

Locked: shorting Canadian Banks

Deal Addict
Dec 6, 2006
3446 posts
543 upvotes
Toronto
Mike15 wrote:
May 17th, 2017 3:42 pm
Again, what thesis? Where's your research & supporting documentation?

Do you mean "theory"... or hunch?
The thesis of "Aside from timing being wrong, the trade is correct!"
Member
Dec 7, 2007
208 posts
64 upvotes
0
leflower wrote:
May 17th, 2017 2:52 pm
LOL.
I love how Gung thinks he is 100% correct and that banks will go up non stop forever...well wake up.
In history we have never lived through a credit bubble so large and money printing this immense...It will end badly.
My thesis was housing and oil...I admit I was early in the trade...but the thesis is still intact.
200 DMA was breached today on the US market...soon to be breached in CAD. Long miners and gold/ short RY is my trade.
You are aware that the recent pullback has absolutely nothing to do with a credit bubble, oil, housing or any of the other parts your "thesis" right?

Markets are pulling back due to political turmoil in the US and the possibility of deregulation, tax reform and Trump's economic policy getting derailed. Essentially you are no different at this point than a doctor telling someone they have weeks to live due to cancer only to see the patient die months later from a car accident and declaring yourself correct for predicting their death.

I'm not saying you are incorrect in your theory that RY will pull back to $60 and cut its dividend (I lied - you're wrong) but if you are going to make that call at least have the conviction to stand by it and not take credit when something unrelated impacts the share price.
Sr. Member
Oct 21, 2014
528 posts
282 upvotes
Burlington, ON
leflower wrote:
May 17th, 2017 2:52 pm
LOL.
I love how Gung thinks he is 100% correct and that banks will go up non stop forever...well wake up.
I didn't say anything even close to that. I've said on many occasions that I don't follow the market day by day, and that I can't predict short term fluctuations in the market. My portfolio is primarily an income portfolio, and I don't daytrade. What I said was that your prediction was wrong, notwithstanding the current political based panic and that you keep moving the goal posts. You don't get to make a prediction and keep shifting the timeframe.

The dividends did not get cut, your thesis is wrong, and what happens from here on out has no bearing on that.
[OP]
Member
Dec 13, 2014
334 posts
92 upvotes
Hampstead, QC
http://www.safehaven.com/article/44382/ ... hite-north


some great technical work on the banks...and the banks sold off yday on Trump (yes )...but since the double top its oil, economy and housing...and that is what will drive bank profits down.
Deal Addict
User avatar
Dec 14, 2010
4010 posts
2862 upvotes
Banks getting stronger. CIBC just purchased Private Bank. Now Laurentian Bank announces the following acquisition:

http://news.sys-con.com/node/4085573


Rod
Deal Addict
User avatar
Apr 12, 2012
1292 posts
227 upvotes
Toronto
rodbarc wrote:
May 18th, 2017 7:43 pm
Banks getting stronger. CIBC just purchased Private Bank. Now Laurentian Bank announces the following acquisition:

http://news.sys-con.com/node/4085573


Rod
Also a new offering to go along with it.

Laurentian Bank of Canada - Subscription Receipts

Short Description: Treasury Offering of Subscription Receipts via Bought Deal
Price: $51.70 CDN
Settlement: On or about May 26, 2017.
Sr. Member
Jun 15, 2012
600 posts
47 upvotes
MB
rodbarc wrote:
May 18th, 2017 7:43 pm
Banks getting stronger. CIBC just purchased Private Bank. Now Laurentian Bank announces the following acquisition:

http://news.sys-con.com/node/4085573


Rod
Canada doesn't have an antitrust law ?
"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."
- Warren Buffett
Sr. Member
Jan 14, 2009
675 posts
193 upvotes
Vancouver, BC
ukrainiandude wrote:
May 18th, 2017 8:20 pm
Canada doesn't have an antitrust law ?
We do and there are plenty of loan providers in Canada. Big 5, NA, HSBC, credit unions, alternate lenders, car dealers, domestic and US stock brokers, etc.
Newbie
Aug 22, 2012
67 posts
64 upvotes
Mark Town
Shorting Canadian banks are a mistake because Canadian banks are monopolies in this country.

They will jointly raise banking fees once the revenue starts to drop. Expect a personal checking costs $30 per moth.

There are not many stable big companies in this country - you can count all of them using your hands. Billions of pension funds have to park somewhere. Canada government has made the deal with banks - no foreign companies are allowed to buy Canadian banks, and the banks can raise prices together whenever they need.
Newbie
May 7, 2017
26 posts
12 upvotes
toolioiep wrote:
May 17th, 2017 4:29 pm
You are aware that the recent pullback has absolutely nothing to do with a credit bubble, oil, housing or any of the other parts your "thesis" right?

Markets are pulling back due to political turmoil in the US and the possibility of deregulation, tax reform and Trump's economic policy getting derailed. Essentially you are no different at this point than a doctor telling someone they have weeks to live due to cancer only to see the patient die months later from a car accident and declaring yourself correct for predicting their death.

I'm not saying you are incorrect in your theory that RY will pull back to $60 and cut its dividend (I lied - you're wrong) but if you are going to make that call at least have the conviction to stand by it and not take credit when something unrelated impacts the share price.
Some of the pull-back is likely a result of short sellers and others who are bearish on the Canadian housing market and Canadian economy more generally. If they are proven right then the OP will be too.
Jr. Member
Oct 12, 2008
188 posts
148 upvotes
Markham/Vaughan
Day traders trying to infer why a stock went up or down a few percentage points are like people who try to infer the shape of an ice cube by looking at the resulting melted puddle of water.
Deal Addict
Oct 1, 2004
3397 posts
187 upvotes
Toronto
zobi123 wrote:
May 18th, 2017 7:44 pm
Also a new offering to go along with it.

Laurentian Bank of Canada - Subscription Receipts

Short Description: Treasury Offering of Subscription Receipts via Bought Deal
Price: $51.70 CDN
Settlement: On or about May 26, 2017.
can someone explain to me why would anyone buy subscription receipts with no interest vs buying common shares instead? For example ALA.R.TO subscription receipts pays 8% interest income, while guaranteeing face value on a certain future date?
Member
Dec 7, 2007
208 posts
64 upvotes
0
From BMO's earnings report this morning:

Year-to-Date 2017 Compared with Year-to-Date 2016:

Net income of $2.74 billion, up 34%; adjusted net income1 of $2.83 billion, up 21%
EPS2 of $4.06, up 34%; adjusted EPS1,2 of $4.20, up 21%
ROE of 13.8%, compared with 10.5%; adjusted ROE1 of 14.2%, compared with 12.1%
Provisions for credit losses of $432 million, compared with $384 million

The dividend was also increased by 5% - which in defence of the OP is like a dividend cut (except that it's the complete opposite).

Certainly dire days for the banks......
/sarcasm
Sr. Member
Oct 21, 2014
528 posts
282 upvotes
Burlington, ON
leflower wrote:
Feb 18th, 2016 8:10 am
http://business.financialpost.com/inves ... =4faa-699e

analyst slashes bank price targets
leflower, it looks like Barclays was a little off on their price targets. For example, they had Royal forecast at $58 after 12 months and it's currently at $93.53 at the close of trading yesterday. You have committed over a million dollars of made up cash to this trade, the worst paper trade I have ever had personal experience with.

Have you learned anything from letting analysts with no skin in the game control your fake money? A question for you though, if in the future you were to put real money up to short a Canadian Bank. Would BMO's monster quarter make any difference to you or is it full steam ahead into even greater losses?

For my own full disclosure, long RY, in case I had not made that clear enough earlier. Smiling Face With Open Mouth And Smiling Eyes
[OP]
Member
Dec 13, 2014
334 posts
92 upvotes
Hampstead, QC
Once again, Gung shot off his keyboard a bit too soon. BMO monster earning are in and stock is down 3%...lol
My short will soon be profitable...conditions are now ripe for a BIG correction in the sector.
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