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Why are bank stocks not recovering as economy begins to reopen?

  • Last Updated:
  • May 28th, 2020 11:53 am
Deal Addict
Nov 28, 2010
1336 posts
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Brampton
casanova2001 wrote: BNS $49.50 Cad is a good entry or should wait for quarterly result end of May to get in?
I started a position at around that price but sold it a couple days later as it seems like banks will be at or close to 52 week lows for a while and I already have it in my other accounts along with 3 of the 4 other big banks. Meanwhile my Canadian index etf has rebounded enough to the point where it's just past the midpoint between the 52 week low and 52 week high. I'm likely going to liquidate the banks if I can break even and stick to indexing.
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Apr 21, 2004
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Anyone think there will be an accounting bloodbath this week and then loan loss provision reversals in the next few quarters?
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Dec 3, 2014
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Ontario
alanbrenton wrote: Anyone think there will be an accounting bloodbath this week and then loan loss provision reversals in the next few quarters?
That seems to be the consensus. How much of this is already priced in and what sort of recovery timeline we are looking at are two questions that come to mind for me.

Before the "big bank fan club" gets upset, yes I know the dividends are safe. My focus at this point is how this all will impact their share prices. I do intend to start building out a significant position in RY (and maybe TD) if we see a (further) significant pullback.
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Feb 28, 2006
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Richmond Hill
Will be interesting to see how the bank stocks fare this week. I was really close to averaging down on my BNS last week when it was close to $50.
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Nov 9, 2013
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Edmonton, AB
llpresident wrote: That seems to be the consensus. How much of this is already priced in and what sort of recovery timeline we are looking at are two questions that come to mind for me.

Before the "big bank fan club" gets upset, yes I know the dividends are safe. My focus at this point is how this all will impact their share prices. I do intend to start building out a significant position in RY (and maybe TD) if we see a (further) significant pullback.
As you mention, I think it all boils down to expectations vs reality.
Keep calm and go long
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Feb 4, 2015
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Canada, Eh!!
I'm thinking of reallocating funds presently in bank stocks and telecomms.

Possibly to BMO preferred ETF and/or bank ETF... not decided which ones yet. Plus return to holding some MFC shares.

With that in mind idea is to sell bank stocks next two days and buy some MFC with that.

Then after bank earnings purchase BMO ETF(s).
2022: BOC raised 2 times and MCAP raised its prime next day.
2017 to 2018: BOC raised rates 5 times and MCAP raised its prime next day each time.
2020: BOC dropped rates 3 times and MCAP waited to drop its prime to include all 3 drops.
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Nov 9, 2013
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Edmonton, AB
llpresident wrote: That seems to be the consensus. How much of this is already priced in and what sort of recovery timeline we are looking at are two questions that come to mind for me.

Before the "big bank fan club" gets upset, yes I know the dividends are safe. My focus at this point is how this all will impact their share prices. I do intend to start building out a significant position in RY (and maybe TD) if we see a (further) significant pullback.
BNS popping at open - suggests things went better than expected.
Keep calm and go long
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Jun 28, 2018
353 posts
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Aurora, Ontario
I've been loading all my spare money into RY the past couple months and have mostly been in the red while tech has been making me money. I'm actually flat as of today. I'm a bit torn between staying the course or dumping my shares and investing in something else.
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Sep 21, 2007
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DarekP84312 wrote: I've been loading all my spare money into RY the past couple months and have mostly been in the red while tech has been making me money. I'm actually flat as of today. I'm a bit torn between staying the course or dumping my shares and investing in something else.
how much of it is your portfolio?
"An essential aspect of creativity is not being afraid to fail." -- Edward Land
Member
Jan 17, 2018
285 posts
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DarekP84312 wrote: I've been loading all my spare money into RY the past couple months and have mostly been in the red while tech has been making me money. I'm actually flat as of today. I'm a bit torn between staying the course or dumping my shares and investing in something else.
I'm curious why RY and not CM? The prices are very similar but CM has a much bigger dividend payout.

I find RY's dividend quite poor to how much it costs per stock. BMO has a similar dividend (1.06 vs 1.08) and they are around $20 cheaper a share, which means you can get more dividends if you invested in BMO vs RY.
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Jun 28, 2018
353 posts
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Aurora, Ontario
It’s about 25% of my TFSA. As for why RY, it’s the biggest bank in Canada with a rock solid history of paying their dividend and solid growth as reflected in their growing share price over the past decade. I figured in a recession they are the safest bet. It was either that or TD for me.
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Jun 15, 2010
248 posts
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RedFlagDeals
Missed the lows, but got into the bank stock yesterday - BNS @ 54.40 and RY @86

Hoping it stays at the current lvls or goes up. Plan is to hold and collect divs. If it goes down from my entry points, put some money from my paycheck to accumulate a bit more :)
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Jun 28, 2018
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Aurora, Ontario
I fully expect half or more of yesterday’s price gains to be erased today. Those earnings reports didn’t look too good.
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Nov 9, 2013
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DarekP84312 wrote: I fully expect half or more of yesterday’s price gains to be erased today. Those earnings reports didn’t look too good.
alanbrenton wrote: They're up though.
It's all about how expectations match with reality. Apparently the market had priced in worse earnings prior to these releases.
Keep calm and go long
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Jun 28, 2018
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Aurora, Ontario
treva84 wrote: It's all about how expectations match with reality. Apparently the market had priced in worse earnings prior to these releases.
I guess. I can’t make much sense of the price movement but I’m not complaining. I’m up about 7% in two days. 🤣

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