Complacency about Canadian banks - Page 2
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Thread: Complacency about Canadian banks

  1. #11
    Senior Member Argonaut's Avatar
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    In Canada we have some terrific stocks, but the TSX is a terrible index. So imbalanced. I agree that the financial component is too high. The banks have done very well in the past couple of years, and my bank allocation drifted away from the earmarked 20%. I feel happy with re-jigging it back to around where my other holdings are when the TD story hit.

    Quote Originally Posted by mordko View Post
    But the debt issue is an interesting one. Are we the most endebted country in the world if one were to add the debt of all citizens and various levels of governments? Not sure but we are certainly up there. Has to be a massive risk. Still, fire won't start without a sparkle.
    Likely nowhere close to countries like Switzerland and Japan.


  2. #12
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    That means we are all in trouble whether you made good decision or bad decision ..when banks make less money their stock prices will go down. Any body investing in TSX index will be same as a guy buying RE in GTA at very high prices.. when things won't work both lose money..

  3. #13
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    Have you all thought of why all these funds have more than 30% explosure in bank stocks ? It must be a good investment for ALL of them do this.

    Well, in more than 20 years of investment, I never have less than 70% in bank (TD and RY) stocks in my pofolio. Buy and hold, never sell any but added more every working years. I have retired for a few years, now it is more than 90%. Do I feel worried, NO ! Sure, I can sell and take some profit. The question is what to do with it ? Any good sure fire investments out there ? GIC ? interest rate is just too miserable. Bond ? not much better than GIC. I might as well stay on with my current plan. Play a bit with my dividends in short term to keep me busy . Bank stocks are for long term. Buy and hold and enjoy the ride.........

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  5. #14
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    An investor should let the profits run & trim the losers...most do the opposite. Silly to sell the fastest growing businesses in Canada. I'm not complacent, but like to make money(token 20 year RY graph here). If things change I will also change.

  6. #15
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    Based on private debt to GDP ratio, Canada is number 6 in the world and moving up the rankings like there is no tomorrow: http://www.tradingeconomics.com/cana...ds-debt-to-gdp

  7. #16
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    Quote Originally Posted by Benting View Post
    Have you all thought of why all these funds have more than 30% explosure in bank stocks ? It must be a good investment for ALL of them do this.

    Well, in more than 20 years of investment, I never have less than 70% in bank (TD and RY) stocks in my pofolio. Buy and hold, never sell any but added more every working years. I have retired for a few years, now it is more than 90%. Do I feel worried, NO ! Sure, I can sell and take some profit. The question is what to do with it ? Any good sure fire investments out there ? GIC ? interest rate is just too miserable. Bond ? not much better than GIC. I might as well stay on with my current plan. Play a bit with my dividends in short term to keep me busy . Bank stocks are for long term. Buy and hold and enjoy the ride.........
    If I read this right, you are retired and you have 90% of your assets in 2 bank stocks.

    In my opinion you ought to feel worried. This is a bet. And the probability of it going wrong is not acceptable for anyone, let alone someone who is retired. Yes, historically these 2 stocks did great. No this does not tell us anything about the future.

  8. #17
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    It sounds like Benting has something like 45% in TD and 45% in RY. Absolutely this is dangerous -- incredibly high exposure both to a single stock and single sector. And what a great opportunity right now, after such a huge rally in banks, to lock in profits and diversify more broadly.

  9. #18
    Senior Member Argonaut's Avatar
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    Yeah, 90% exposure to banks is even crazier than the overweight that's in the TSX. Even the simple practice of throwing a telecom in there would have given you similar or better performance in the past several years and also reduced your risk. Diversification is your friend. It's also a free lunch.

  10. #19
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    Using Argo's style of equal weight Canadian exposure has worked out well for me. I switched away from the TSX index late last year once back-testing this over 10 years convinced me that equal weighting is a better approach. My primary portfolio is now { BCE, CNR, FTS, RY, SU } based on the top stocks in each XIU sector.

    Since Sept, the total return of the equal weighted group is 11.5% vs 8.7% for XIU, so it's not like I'm suffering due to my lower financials weighting.

  11. #20
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    James why Suncor over a pipeline? And why no consumer products like you had listed in your Slice and Dice?


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