Investing

shorting Canadian Banks

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  • Mar 21st, 2024 10:34 pm
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Deal Addict
Oct 21, 2014
1940 posts
2940 upvotes
Burlington, ON
kilburn305 wrote: no im not. just out of Canada banks and into ZBK.

I think you're gonna get smoked this year and with your cocky attitude you deserve it.
I am in this for cashflow and if you're talking about such a short timeframe as a year then you haven't been reading my posts. I'll sit on stock for YEARS if I think it's prospects are good no matter what the charts say. Go look through my posts if you like and check my buys of Nike for example. I'm still holding.
Deal Addict
Aug 16, 2015
1201 posts
522 upvotes
Conquistador wrote: Just had to quote this gem for posterity.

So NOW the implosion is starting? Funny, people have being saying that around here for years and years. Just had to laugh at this latest prognostication.


Prices are down 11% and sales volume is at 2009 levels buddy. Check the news every once in awhile.
Sr. Member
Aug 14, 2010
612 posts
386 upvotes
Toronto
kilburn305 wrote: no im not. just out of Canada banks and into ZBK.

I think you're gonna get smoked this year and with your cocky attitude you deserve it.
Just so we can get some clarity when we look back at this in 2019, what's your definition of "smoked"? -40%? -30%?
Deal Addict
Aug 16, 2015
1201 posts
522 upvotes
emanon86 wrote: Just so we can get some clarity when we look back at this in 2019, what's your definition of "smoked"? -40%? -30%?
Ill let you know when you're there :P
Deal Guru
Aug 17, 2008
10990 posts
13540 upvotes
kilburn305 wrote: the banks are a short. I sold all my ZEB today. The housing market has just started it's implosion.

The guy from the big short also agrees Canadian financials are the next big short.

https://www.bnnbloomberg.ca/steve-eisma ... -1.1076102
For those who did not watch the video, please watch it and draw your own conclusions. Don't take my word or anyone else's word. IMO, he did not say nor are you paraphrasing what he said.
Answer not a fool according to his folly, lest thou also be like unto him = Never argue with an idiot, they'll only bring you down to their level & beat you with experience
Deal Addict
Oct 21, 2014
1940 posts
2940 upvotes
Burlington, ON
MrMom wrote: For those who did not watch the video, please watch it and draw your own conclusions. Don't take my word or anyone else's word. IMO, he did not say nor are you paraphrasing what he said.
It's too late, he already sold his bank etf, although considering his posts I was pretty surprised that he even had any holdings of Canadian banks to begin with. Going short is a tough game with these because the dividend is so high, you have to be nimble to avoid losing from the dividend. I highly doubt the average investor, especially one that takes direction from bnn (lol) is going to be able to do that.

If you don't believe in the asset by all means sell, but short? Come on. Read this thread and learn from mistakes.
Newbie
Mar 22, 2018
58 posts
12 upvotes
Yes solid report, no one is debating the banks ability to make money, I am saying they are overvalued. Last quarter CIBC had good earnings, went up $3 then ended up barely positive, today I think its down as well.
Deal Fanatic
User avatar
Dec 14, 2010
7113 posts
9300 upvotes
canvestor wrote: Yes solid report, no one is debating the banks ability to make money, I am saying they are overvalued. Last quarter CIBC had good earnings, went up $3 then ended up barely positive, today I think its down as well.
How overvalued? What is your suggested number for intrinsic value? Or book value?
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Deal Fanatic
User avatar
May 11, 2014
6582 posts
9091 upvotes
Rankin Inlet, NU
canvestor wrote: Yes solid report, no one is debating the banks ability to make money, I am saying they are overvalued. Last quarter CIBC had good earnings, went up $3 then ended up barely positive, today I think its down as well.
canvestor wrote: P/E Ratio closer to 9.
Really? Your short thesis is not based on deterioration in earnings, but merely P/E ratio? That is a very flimsy basis for a short especially one where you have to contend with a dividend.
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Deal Addict
Oct 21, 2014
1940 posts
2940 upvotes
Burlington, ON
canvestor wrote: P/E Ratio closer to 9.
If that's your full reasoning I guess we now know while you're short $300k+ in the hole on RY...
Deal Fanatic
User avatar
Dec 14, 2010
7113 posts
9300 upvotes
canvestor wrote: P/E Ratio closer to 9.
Intrinsic value and book value is measured in dollars. What is a good number for you here?

P/E 9 is meaningless without factoring its typical ratio and earnings forecast. Btw, the industry pays a lot more than 9 times earnings for Canadian banks. Royal typically trades at a P/E of 13, which is reasonable given that earnings are forecast to grow to $8.38 this year and to $8.94 next year.

It traded at P/E of 9 in 2008, when shares were way below book value.

So what is your take for RY intrinsic value?


Rod
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Newbie
Mar 22, 2018
58 posts
12 upvotes
So maybe im a horrible investor, im still happy with the way the banks are performing today. I got nervous when CM had better earnings than I expected but I guess they just werent good enough.
Deal Addict
Oct 21, 2014
1940 posts
2940 upvotes
Burlington, ON
canvestor wrote: So maybe im a horrible investor, im still happy with the way the banks are performing today. I got nervous when CM had better earnings than I expected but I guess they just werent good enough.
Let's improve the investing skills. A company that is trading at a bit under 14x, yielding 3.5% that increased it's earnings 20% yoy is probably not a good long term short. The banks just generate far too much cash to be shorted over any long period. You have to be very nimble to short these things or you'll get obliterated by the dividend.

TORONTO, May 24, 2018 /CNW/ - TD Bank Group ("TD" or the "Bank") today announced its financial results for the second quarter ended April 30, 2018. Second quarter reported earnings were $2.9 billion, up 17% and adjusted earnings were $3.1 billion, up 20% compared with the same quarter last year.

TD Q2 2018

Pro tip: Don't get married to a position, and don't let your political views control your money. Have a thesis, and if that thesis gets invalidated, take your loss and exit.
Deal Addict
Oct 21, 2014
1940 posts
2940 upvotes
Burlington, ON
canvestor wrote: Yes the earnings have been incredible on the banks.
Has this changed your view on whether you should continue your short? Those who have been in the industry for a long time call this "check yourself before you wreck yourself".
Newbie
Mar 22, 2018
58 posts
12 upvotes
I am definitely thinking of closing out the positions, not doing nearly as well as I was a few weeks ago but maybe better to be safe than sorry.
Sr. Member
Oct 27, 2014
560 posts
1078 upvotes
Toronto, ON
canvestor isn't as fun as leflower, sees too much reason
Newbie
Mar 22, 2018
58 posts
12 upvotes
Banks are still down though (except TD) despite good earnings.

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