# Royal Bank (RY)



## 50invester

What's up with RY???


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## webber22

Things that have come from the latest batch of US earnings reports ...

- Assessing financial reports in the banking sector is still a muddy and elusive exercise
- Market-implied view of growth is overly pessimistic
- Not seeing the top-line growth
- Drop in revenues, sluggish bond-trading and loan businesses


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## Eder

RY is only up 13.21% this year so I guess best hit the panic button.

Seriously this stock is a cash cow and belongs in all portfolios.

(disclaimer: I sold a pile at $60 but still own a bigger pile)


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## gibor365

Eder said:


> RY is only up 13.21% this year so I guess best hit the panic button.
> 
> Seriously this stock is a cash cow and belongs in all portfolios.


RY.TO on of few on TSX who was up today


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## Jungle

RY was a dead stock for almost a year...then it just went up like $10 share. It has fallen behind of it's other CDN banks. I believe their financial results and US investments held them back. They are the largest bank (by market cap I believe). I believe in them and have faith they are a good investment (blue chip) and they are due for a divided increase. It will come.


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## Jungle

Again they miss estimates... is RY a DAWG right now?


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## Dmoney

Jungle said:


> Again they miss estimates... is RY a DAWG right now?


They have the most exposure to capital markets and they took a big loss in the U.S. They will come back, but I don't think they're anywhere near a DAWG with the likes of HP, RIM et al. 

I haven't followed RY as closely as I've been following a couple others, but the business fundamentals are very similar across the board. The Canadian banking industry has consistently double digit ROE, often nearing 20% for some of the banks. 

In choosing a bank, the way I see it is: TD you're buying domestic customer service (I'd worry about their U.S. adventures), BNS you're buying international exposure, particularly Latin America and Asia, RY you're buying a top-tier investment bank and strong capital markets operations which means that earnings will fluctuate substantially, BMO you're buying a high dividend, muted growth and consistent earnings drawn from the domestic market.... CIBC you're throwing your money away


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## KaeJS

Dmoney said:


> In choosing a bank, the way I see it is: TD you're buying domestic customer service (I'd worry about their U.S. adventures), BNS you're buying international exposure, particularly Latin America and Asia, RY you're buying a top-tier investment bank and strong capital markets operations which means that earnings will fluctuate substantially, BMO you're buying a high dividend, muted growth and consistent earnings drawn from the domestic market.... CIBC you're throwing your money away


Bingo.

You should be a talking head. Great analysis. 

It does seem weird to see RY in the 40's.


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## Jungle

I've seen a lot of posts on that about CIBC. They may be focusing on local growth for now. For good news, they just beat estimates and increased dividend about 3.5%!! So glad I bought during the dip. Too bad RY can pull up right now.


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## Assetologist

I disagre with Dmoney, CIBC has been great for me.
And... Now a nice little income hike today.

I am frequently baffled advice such as "you can't/shouldn't try and put market timing into practice" yet then acknowledging that way too many small Investors "Buy high and sell low"!

If you buy low then you buy a margin of safety.


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## Dmoney

Assetologist said:


> I disagre with Dmoney, CIBC has been great for me.
> And... Now a nice little income hike today.
> 
> I am frequently baffled advice such as "you can't/shouldn't try and put market timing into practice" yet then acknowledging that way too many small Investors "Buy high and sell low"!
> 
> If you buy low then you buy a margin of safety.


All the banks have been great over certain periods. Great results today with the dividend increase as the kicker. Having worked there, I have a slight negative bias, but over the past decade or so they have largely been an also-ran in terms of corporate strategy. They plod along, not doing anything extremely well, and not doing anything too poorly. 

I just worry that their lack of differentiation will set them back. They have also pulled some pretty bad moves, particularly in the lead up and aftermath of the credit crisis. Large exposure to toxic assets at the time.


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## Toronto.gal

Assetologist said:


> CIBC has been great for me.


For me too! 

CM & BMO have done pretty good since I purchased them. Unfortunately, atm I have lots of RY shares, though I did not complain when a few days ago RY dividends purchased many free shares for just above $49.


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## Jungle

I might add to RY if it dips below 48. CM, BMO, BNS have all taken off now. (we own all lol)


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## webber22

Robot trading is punishing this stock since the p/e is now 17 due to the US accounting write-down, when in fact they really made 1.5 billion that quarter and will continue to do so. With a yield of 4.3% it sure beats GIC's.


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## humble_pie

i for one never sell bank stocks. I have RY but would not be tempted to acquire more until a viable new path becomes clearer. Where is growth supposed to come from. Even the vaunted roybank investment banking division seems stuck in a rut.

there are only 5 lead canadian banks. They are highly competitive. What seems to happen is that one may lag for a while - usually for a few years - in terms of its investment appeal & reputation. Not long ago the fall guy was bmo. Then the laggard reforms itself, as bmo did, & eventually its rep & its share price catch up.

it's a good idea to own 3 out of the 5, or at least 2. It's an even better idea to continually sell option strangles on the holdings. These should be far enough out of the money to not be assigned but near enough to capture a reasonable premium. Current returns not including any appreciation in the underlying stock can be boosted from dividend yield in the 4% range to about 7-8% including option gains. A nice combo of workhorse plus no-brainer.


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## Lephturn

Interesting humble - you know I'm a fan of collars but you have helped me learn more about them and the challenges of getting them off for a reasonable price.

I'm assuming you are selling the call side of the strangle closer than the put side? About how far out do you tend to sell them?

Thoughts on if it is worth doing this vs. holding ZWB and buying puts to protect on XIV?


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## Jungle

I wanted to sell put options on royal bank. Share price is around $48 right now, I wonder if we can see a $46 or $45.


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## humble_pie

nay lephturn tis thee who hast help'd mee learn more about collars.

in particular, that some professional managers are doing a rip-roaring collar trade, securing hi-dividend payors even though cost of collarization does eat somewhat into the return ... because the managers are holding such positions for conservative accounts in lieu of bonds.

re strangles w banks, i usually sell only half as many puts as i hold shares while selling calls against all shares. Both are reasonably far otm but as you say the puts are usually another strike further otm.

the meagre put count is a defensive thing. It's more of a psychological attitude than a logical one. I don't mind holding good stock through drops of 20, 30, 40%. But if i were to sell puts & then stock were to drop by 40% so that if exercised i would have to pay 40% over market ... this would be intensely distressing to me. It doesn't make sense, but it's definitely how i feel.

here's a useful & very simple formula to determine when an itm put is at risk of assignment. When (strike minus stock) is equal to or greater than the option bid, risk of assignment is high.

you can see what is going on. The formula identifies whether any premium is left to protect against exercise. When premium is gone, the counterparty will make more $$ by exercising. As long as sufficient premium exists, he will sell to the option bid. Of course, at X dates any dividends that are in the offing enter into the picture & encumber the formula.

how far out ? usually about 6 months to begin with. I'm not one for the weeklies. How about yourself.

i don't even like waiting to roll until the last 2 weeks, because about then is when the dealer begins maintaining his bloodthirsty low/high B/As. And although you have related how you are able to persuade your brokers to intervene with dracula the dealer at the last minute & get him to adjust his prices, i have never been able to do this. Leph, it must be your special aura. For me, though, it's always been dracula or nothing. So i try to get everything done well before an expiration date.


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## KaeJS

Looking attractive at this new 52wk low..

methinks I want some.


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## davext

I would buy RY as well but I think there is plenty of time to buy. The market is in the crapper, every few weeks it's back in the crapper. I'd buy closer to the dividend date, maybe in the next 3 weeks. 

With RY now mostly out of the US market, they can't really go wrong. 

The only reason they lose money is when they do dumb things. The only potential headwind would be the overall market, and the Canadian housing market.


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## Betzy

I just bought some more of this for $46.55 and now it's $46.17


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## al42

Had a small order filled today @$45.95.


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## Jungle

Nice ^^ added 33 positions @ 46.02. Closed at 46.20.


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## King Tut

just got my first RY stocks @ 46.12 today!!


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## Jungle

Good job, I also added again @45.97. I will be selling our BMO and Scotia positions and adding that money to RY. I just added scotia anyway @ 52 and I see more value with RY. Also we've had BMO now for over 10 months and collected dividends-that's about it. They wont even increase them for that matter. 

RY has a lot of upside potential and still has a 12 month target price of $60. The stuff they were losing money on was sold in the states and they are moving on with that. 

With a dividend of 4.7%, that's an increase of 35%. I'll take that.


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## Toronto.gal

*Jungle:* do you own any other banks, other than the ones you mentioned? While I understand what you are trying to do, don't forget to be diversified. 

What if for example, you had not purchased BNS & BMO and only had RY the last year?

*King Tut:* congrats.


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## Jungle

Thank you Toronto Gal. We also have CM too.


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## marina628

I have all 5 bank stocks and RY is the one i own less of ,maybe follow your lead jungle and buy some on Friday when I get paid.Praying CAD FALLS SOME THIS WEEK LOL


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## humble_pie

there seems to be a fetish on for roybank in cmf forum right now, just like there used to be a fetish for husky energy.

so i'm curious ... where are we seeing a lot of upside potential. OK ry backed out of the US a bit hangdog ... but where are they "moving on" to ?

i for one can't see the canadian wealth management market - where ry wants to expand - being big enough to power them ahead.


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## Toronto.gal

Jungle said:


> We also have CM too.


2 is better than 1, but 3 would be even better IMO.


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## ddkay

> SEC officials also are moving ahead with their probe of CDOs sold in 2006 to five Wisconsin school districts.
> 
> In August, the SEC filed a civil-fraud lawsuit against Stifel Financial Corp., the broker for the deals, claiming it misled the school districts about the risks of the securities.
> 
> Stifel has denied any wrongdoing and is fighting the lawsuit. Now, though, the SEC is weighing civil charges against the Royal Bank of Canada unit that created the mortgage-bond deals, according to people familiar with the matter.
> 
> A final decision on any enforcement action hasn't been made, these people said.
> 
> RBC has disclosed in securities filings that it is "subject to regulatory investigation" regarding the investments made by the school districts.
> 
> In a statement, an RBC spokesman said Stifel "conceived of this investment program, branded it [and] induced their longstanding school district clients to participate." RBC also said Stifel represented in writing that it "had determined that this type of investment was suitable in light of the districts' objectives."
> 
> Stifel alleges that RBC misled it on the riskiness of the deals. A Stifel spokesman said that "if the product had been as represented, it would have been suitable."


http://online.wsj.com/article/SB100...32012973372.html?mod=WSJ_qtoverview_wsjlatest


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## gibor365

Toronto.gal said:


> *Jungle:* do you own any other banks, other than the ones you mentioned? While I understand what you are trying to do, don't forget to be diversified.
> 
> What if for example, you had not purchased BNS & BMO and only had RY the last year?
> 
> *King Tut:* congrats.


I hold BMO, TD and RY...my wife also has CM shares through her job... the only one where I'm in plus territory YTD is BMO


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## King Tut

Toronto.gal said:


> *King Tut:* congrats.


Thank you T.gal, King Tut has an affinity for everything 'Royal'


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## Toronto.gal

King Tut said:


> King Tut has an affinity for everything 'Royal'


I would have never guessed KT. 

*Gibor:* I'm surprised you don't own BNS. I think it is the one bank that protects from the wild swings of the other BIG 4.


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## Eder

humble_pie said:


> there seems to be a fetish on for roybank in cmf forum right now, just like there used to be a fetish for husky energy.
> 
> so i'm curious ... where are we seeing a lot of upside potential. OK ry backed out of the US a bit hangdog ... but where are they "moving on" to ?
> 
> i for one can't see the canadian wealth management market - where ry wants to expand - being big enough to power them ahead.


Their current forward PE is around 10 and 5 year average PE is around 15. No idea what will drive their stock higher but current yield is very attractive.


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## gibor365

Toronto.gal said:


> I would have never guessed KT.
> 
> *Gibor:* I'm surprised you don't own BNS. I think it is the one bank that protects from the wild swings of the other BIG 4.


Cannot have everything...maybe will buy sometime... but I have ZWB


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## Abha

Eder said:


> Their current forward PE is around 10 and 5 year average PE is around 15. No idea what will drive their stock higher but current yield is very attractive.


When the market picks up, their investment and wealth arm will generate tons of revenue.

They are still the market leaders in pretty much every category and Canadian banks in particular run in cyclical trends. Right now RY is in the dumps while others appear to be all stars (CIBC).


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## PMREdmonton

I'm still patiently waiting at $45 for RY.

I'd also like to get BNS at $48.

Sometimes it is hard to be patient as I was so close this week to getting it at my price.

I think Buffet said unlike baseball you can sit patiently while pitch after pitch goes by. You make money by waiting for the big, fat one and then smoke it for a homerun.


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## jagman

I guess i will need even more patience. Would not touch Royal till it hits about $38.......


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## King Tut

jagman said:


> I guess i will need even more patience. Would not touch Royal till it hits about $38.......


Why $38? how did you come up with this cut off price?


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## PMREdmonton

King Tut said:


> Why $38? how did you come up with this cut off price?


I doubt this happens short of another major financial crisis. At 38, their yield is 5.7% and PE is around 8.


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## peterk

bloody better not go down to 38!!


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## Jungle

Anyone know what's going on with this? s&p target still @ $60.


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## dubmac

Morningstar has RY rated as a "Consider Buy" at 36.40. BNS is also a "consider buy" at 34.30. ...if that, and matters in any decisions. I bought 40 RY at 47, and 50 BNS at 51. recently - if they drop, then I'll buy more. Seems strange that RY's best value price is higher than BNS..dunno why


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## HaroldCrump

dubmac said:


> Morningstar has RY rated as a "Consider Buy" at 36.40. BNS is also a "consider buy" at 34.30. ...


BNS is sitting at over $52.
So Morningstar is calling for a 35% drop in these bank stocks?
BNS hasn't been that low since the late 2008 - early 2009.


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## doctrine

Would consider more RY at $45 - would buy a significant amount at $40.


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## dubmac

HaroldCrump said:


> So Morningstar is calling for a 35% drop in these bank stocks?
> .


Harold..I don't think that Morningstar's ratings work that way - they don't call for or predict anything. Their assessment is based on a 5 star rating based on the value of the company whose stock is being evaluated. 

Right now (as of Oct 28), RY is a 3 star stock (out of 5), it's fair value is $52.00 per share (Fair Value). Their rating system would identify it as a 5 star stock if the price were $34.60 per share (undervalued "Consider Buy") and only 1 star if it were around 70.20 per share (overvalued "Consider Sell"). 

The analysts ar Morningstar state that ..." Our fair value estimate differs from a "target price" in two ways. First, it's an estimate of what the business is worth, whereas a price target typically reflects what other investors may pay for the stock. Second, it's a long-term estimate, whereas price targets generally focus on the next two to 12 months."


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## King Tut

dubmac said:


> Morningstar has RY rated as a "Consider Buy" at 36.40. BNS is also a "consider buy" at 34.30. ...if that, and matters in any decisions. I bought 40 RY at 47, and 50 BNS at 51. recently - if they drop, then I'll buy more. Seems strange that RY's best value price is higher than BNS..dunno why


This is based on value investing: both prices are based on book value x 1.2, which would be the maximum price one should be willing to pay for a depressed good stock. I think it would take another recession to see such numbers for BNS and RY.


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## Jungle

If we get another negative day Monday, we could easily see this in the $44 again. To add or not to add, that is the question.


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## KaeJS

I would love for POT.TO to go up tomorrow and RY.TO to go down.

I would sell my 100 POT and buy 100 RY 

If you ask me, I would call it an easy buy.

But I am very financials biased... 

Look what happened last time it hit $44.... it was back to $49 in one month!


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## Toronto.gal

KaeJS said:


> I would love for POT.TO to go up tomorrow and RY.TO to go down.


I'm afraid neither will happen *tomorrow.* 

If what you want is catch the next RY dividend payment, you're too late I think.


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## al42

Toronto.gal said:


> I'm afraid neither will happen *tomorrow.*
> 
> If what you want is catch the next RY dividend payment, you're too late I think.



Yup...ex dividend was Oct.24th.


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## KaeJS

Toronto.gal said:


> I'm afraid neither will happen *tomorrow.*
> 
> If what you want is catch the next RY dividend payment, you're too late I think.


 Today is Saturday. 

I wasn't concerned about catching the dividend. I was interested in Trading RY, and with the high yield, I wouldn't mind holding until I could sell at profit.


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## al42

http://seekingalpha.com/article/305785-head-north-for-these-financials-yielding-5


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## Jungle

Was hoping we had a bad day today, I want to add in the low 45 or 44.
I added last time in the 44 range. We just need a red day on the market to see this. I guess I'll set a limit order tomorrow and just wait.


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## OptsyEagle

Anyone ever looked at Equitable Group (ETC). They don't have as high of yield as Royal Bank or any of the other majors but it just raised its dividend 9% and certainly makes more money per dollar invested then any of the majors.

It trades at about 6 x EPS and as far as I am concerned has the same risks as any of the other banks in Canada. Of course with where it is priced it would seem it's upside is considerably higher.

Here was it's last quarterly report.

http://finance.yahoo.com/news/Equitable-Group-Reports-Third-cnw-1549965413.html?x=0&.v=1

I sure wish my other bank stocks had profit reports like that.


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## eurodin

Hey guys I had a quick question, if you buy RY on the NYSE are the dividends in US dollars are CDN dollars? are they still 54cents CDN or usd?

Thanks


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## Square Root

eurodin said:


> Hey guys I had a quick question, if you buy RY on the NYSE are the dividends in US dollars are CDN dollars? are they still 54cents CDN or usd?
> 
> Thanks


RY pays only CDN$ dividends on the common.


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## humble_pie

actually the answer is quite a bit more complicated. This topic - payment of dividends in cross-listed accounts including imposition of FX fees by the broker on said dividends if they are paid into the "wrong" account - has come up several times. I have noticed that few are understanding the situation properly.

(how come i understand it ? because i have cross-listed positions & frequently arb options between the 2 currencies. So i watch carefully where dividends go.)

if investor buys RY in USD in his US account, he will receive dividends in USD but the broker *will* charge FX on this dividend because it was originally paid in CAD only. This is a bad situation. The solution is to move the stock to the Canadian account.

if investor buys RY in USD in his CAD account, he will receive dividends in CAD but the broker *will* charge FX on the conversion cost of the monies used to pay for the RY shares in the first place. This is also a foolish situation; canadian investor should not normally be incurring FX fees to buy canadian stock in USD on canadian exchange.

additional complications to the dividend story:

some canadian companies - most big resource stocks such as big miners, big energy & big agriculture plus thomson reuters & miscellaneous others - pay their dividends in USD even though they are canadian companies. Most canadian investors who keep these shares in their canadian accounts do not realize that the broker *is* charging FX fees on these dividends. Many investors refuse to believe this even when the information is pointed out. 

brokers, who are reaping massive profits from FX fees on these dividends, go out of their way to conceal this info from investors. Front line general representatives at online broker call centres are not trained to answer these dividend questions accurately, therefore the answers tend to be haphazard. Broker statements & confirms do not show this FX chop.

the bottom line is: find out in which currency a dividend on a canadian stock is primarily paid. Investor should keep the stock in the account whose currency matches. Do not keep dividend-paying stock in the opposite currency unless you wish to gift 1.50% of every dividend to your broker.


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## humble_pie

postscript:


Q: if i keep canadian stock that pays its dividends in USD in US account so as not to incur broker's FX fee, will these dividends be subject to US withholding tax ?

A: no, never.


Q: if i keep canadian stock that pays its eligible dividends in USD in US account, etc, will these dividends still be fully eligible for canadian dividend tax credits ?

A: yes, always. The result will be that broker will send investor an accurate T5 which will be in US dollars. Investor will have to convert all figures - ie the grossed-up dividend total plus the federal & provincial tax credits - into canadian dollars in order to report these dividends as income to the tax authorities. These figures will be shown on the T5.

large bank-owned brokerages are scrupulously reliable in this respect. They do not make mistakes. I am not sure about the small privately-owned onliners. I don't know what software they're using & i have read about problems in this area.


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## londoncalling

Thanks for the tip HP.  I will have to take a closer look at my holdings as I have no desire to leave any money that is promised to me on the table


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## humble_pie

yes the broker is really the big dog that jumps up on the table after the banquet is laid & all the hams, geese, turkeys & roasts have been spread out on their tempting platters. The guests haven't arrived yet. Host, hostess, cookie & waiters have temporarily withdrawn from the dining room. Then up jumps Rover & seizes the best bone for himself.


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## KaeJS

Investors are really hating this stock right now, eh?

I just want to sell out at $46.50


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## m3s

Maybe try more volatile stocks for these short term 3% gains?


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## drip99

Believe it or not, the Canadian banks are a pretty good buy right now. Low PE, yields around 4+, all have just started to raise dividends, and many at/near 52 week lows.

Having said that........I would love to see them back at the low levels a few years ago......excellent once in a lifetime buying opportunity.


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## KaeJS

mode3sour said:


> Maybe try more volatile stocks for these short term 3% gains?


Problem is that there is more risk involved. 

I rather have a stagnating stock trying to make a quick buck, then end up with a dying stock trying to make a quick buck.

At least with RY, I can afford to hold it for as long as I need to.


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## doctrine

RY, TD and BNS, usually the three most recommended of the bunch, are all looking quite attractive.


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## londoncalling

I'm considering picking some up tomorrow at 44.75. Not my first choice of bank stocks but the price is sure looking good.


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## webber22

Big 5 banks start reporting earnings on Dec 1st, with RY on Dec 2. There is always a run up in price prior to this, so $46 is not that far off - my guess is that most people trading this year have a cost base of at least $50


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## Jungle

Of all the bank stocks, why is RY taking the worst beating? Is it their unflattering performance in the last year?


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## Jungle

Wow hitting $44 possibly 43 now.. edit: it hit 43.98 briefly.


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## webber22

Of all the CDN banks, TD and RY had a few hundred million exposure to Italian debt, maybe that's why they're down the most today. There was a rumor of an RY dividend increase announcement Dec 2nd.


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## Jungle

^^ Thats right. 

Analyst would like to see a dividend increase from RY, BNS and another bank, but I can't remember. 

I would be shocked, happy and surprised if they did this. I think RY should because investors are getting hosed on the stock price. Time to give back some money and hopefully boost share price. (I doubt it)


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## KaeJS

I am thinking of buying another 50.

Right now I have 50 shares at $45.45.

Problem is that I would have to purchase that extra 50 on margin..... and I don't know how safe I feel right now increasing the amount i owe.


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## Square Root

Bank stocks. In theory they are pretty good buys at these levels. The Euro debt crisis has everyone spooked about all banks. The Cdn bank direct exposure is not significant but investors seem more worried about contagion. RY yields about 4.8% which is extraordinarily high by historic measures. Ry has done worse than TD and BNS because they have the largest capital markets and wealth management businesses and these are really suffering in this environment. In risky times we have to remember that banking has a very leveraged business model so will often display volatile stock prices. 
It looks like the NA economies are doing a little better and may well avoid a recession. This being the case one has to wonder how much our Banks will actually be hurt by Europe. I suspect the markets are overreacting. 
My advice is to hold or buy more with a view to keeping it for at least 6 months. The old saying "markets can remain irrational longer han I can stay solvent " comes to mind though.


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## groceryalerts

Ouch, the financials today took a beating. I still like dividend stocks like SLF and RY for the long term though - once we get through this rough patch (Italy, greece)


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## jcgd

Are most of you guys short term traders? I'm curious how our bank stock will look in 10 years from the prices today. What are people's thoughts on that?

RY has quite a high P/E compared to the others. Are earnings down because of a mistake on their part, or what's the deal there?


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## KaeJS

jcgd said:


> Are most of you guys short term traders? I'm curious how our bank stock will look in 10 years from the prices today. What are people's thoughts on that?


I am a short and long term trader. You can be both.

Your bank stock will be shining in 10 years from now.

100 Shares of BMO will cost you $5700.

over 10 years, assuming the dividend doesnt increase or decrease, you will receive $2800 in dividends alone.


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## Jungle

Small order [email protected] 44 even today.


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## londoncalling

londoncalling said:


> I'm considering picking some up tomorrow at 44.75. Not my first choice of bank stocks but the price is sure looking good.


Whoops! could've got her for a buck 80 cents less. oh well, who knew


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## Jungle

Stocks are like that.. you'll buy then a couple days later it's 3% lower. Then a day later it's 5% higher. Then it drops 12%. 

Best to DCA a little by leaving room to use a couple of purchases. I think we've done like 5 now with RY and I've about had it. Our purchases are probably small compared to others. Questrade 4.95 helps with that.


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## londoncalling

Jungle said:


> Stocks are like that.. you'll buy then a couple days later it's 3% lower. Then a day later it's 5% higher. Then it drops 12%.
> 
> Best to DCA a little by leaving room to use a couple of purchases. I think we've done like 5 now with RY and I've about had it. Our purchases are probably small compared to others. Questrade 4.95 helps with that.


I do buy my stocks in bites as well and doing it in chunks always eases the short term pain of a stock price dropping after purchase. However, like you mentioned, it is usually up at some point and I feel relieved at least till it drops. 

I usually try to limit my purchases to thirds or quarters but sometimes that is difficult to do if the price looks appealing. I would definitely admit that the 4.95 commish from Questrade makes the decision to purchase in segments much easier to do. 

Cheers!


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## Betzy

Jungle said:


> Small order [email protected] 44 even today.


Me Too 100 more shares So now I own 200 and an option.


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## Jungle

WOW get your 5% dividend now from RY, price is in low 43's.


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## Ihatetaxes

Made a big purchase of RY this morning and sold near days end for a $0.54/share profit. I put the sell order in around noon thinking it was highly unlikely to see $44.40 but it did. I still have a a few hundred shares that I had purchased months ago so today's quickie offsets some of the loss on those shares.


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## Jungle

Jungle said:


> Stocks are like that.. you'll buy then a couple days later it's 3% lower. *Then a day later it's 5% higher.* Then it drops 12%.


Seems like that is the case today. Anyway I feel better after todays 5% jump. Break even point for me. Too overweight to add more really.


----------



## KaeJS

Break even for you?

In the money for me. 



I waited a month or so, though.


----------



## Jungle

I have been collecting dividends a while now..3 payments I think. I did not count those, so maybe cost/loss/gain is less? What didn't help was the first buy was in the 52's, so I've got it down quite a bit. This was the worst position in our stock portfolio. 

I am holding for dear life so in 30 years, this should not matter. Unless earth gets wipe out.


----------



## londoncalling

Jungle said:


> I am holding for dear life so in 30 years, this should not matter. Unless earth gets wipe out.


I hope this isn't a market forecast. If so I will need to get out my duct tape and machete


----------



## humble_pie

on the negative side, i've said this before & i'll say it again, ry is a bank that has, for the time being, lost its way. It's coasting on its old wornout rep as wealth management leader, but there isn't enough business in canada to provide growth, not with every other financial institution in canada competing for the same wealth management dollar.

the big multi-decade roybank loss saga imho was its widespread failure in the US of A. For a while top management mumbled about turning towards europe & towards the UK in particular, but look what happened to europe, so that idea has gone down the drain as well.

where will roybank go ? what is going to be its leadership role ? banks such as td, bns, na & even bmo are on track with their global plans ... but ... ry ... is presently ... drifting.

on the positive side: roybank, like every canadian bank going through challenging periods in the past, will find its way back. I still hold all my ry shares & can still collect close to a 7 or 8% return including option sales, which is good enough for a no-brainer investment imho.

what i've witnessed with the big 5 is that, every decade, one or another of them will be out of favour. Only a few years ago it was bmo. Today it's roybank. But always the laggard bank will manage to correct itself & climb back up.

banks are a canadian strength. They are good lifetime investments, aka 30-year investments, imho.

if i were starting out in canadian banks, i'd avoid ry. I'd go for td, bns, maybe natbank or bmo. Gosh, i even saw some analyst recently making the case that come-from-behind commerce bank is going to get its time in the sun soon.


----------



## Uranium101

Agree with everything you've said Humble Pie.

I got a tip from a friend to buy Royal Bank to Diversify. I would have done better with holding only TD and BNS in the beginning, but no, he told me to get another bank.

I have seem TD's advancement in the US. our company uses TD bank in the US too. It is good that now Americans lose their confidences in their American banks. TD may be deemed as a trusted bank since it's Canadian.

I like BNS's expansion plans. They have gone into places no other Canadian banks dare to go.

I see no growth from RY for now. I mean, they have announced share buy backs in the recent past, and yet their total number of shares outstanding increase quarter by quarter. I didn't hear any acquisitions by issuing shares either.


----------



## Homerhomer

humble_pie said:


> what i've witnessed with the big 5 is that, every decade, one or another of them will be out of favour. Only a few years ago it was bmo. Today it's roybank. But always the laggard bank will manage to correct itself & climb back up.
> 
> banks are a canadian strength. They are good lifetime investments, aka 30-year investments, imho.
> 
> .


On annual basis the dog of Canadian banks approach seems to outperform the basket about 70% of the time (if my memory is correct).


----------



## Toronto.gal

For long term positions, I care more about a low entry price [for share accumulation] and about the upside potential [20+ years]. 

RY's low price + free reinvested dividends at a discount is fine for me, however, if my ACB was in the mid $50's, then I would not be too happy. 

Trading a portion of this & other bank stocks has also not been bad at all.

My fav. CDN bank stock is between BMO & BNS.


----------



## gibor365

Toronto.gal said:


> RY's low price + free reinvested dividends at a discount is fine for me, however, if my ACB was in the mid $50's, then I would not be too happy.
> 
> .


This is why I'm not too happy about RY. Another problem that I have pretty big allocation % in RY, so afraid want to average down.

So far my favorite is BMO


----------



## KaeJS

humble_pie said:


> Gosh, i even saw some analyst recently making the case that come-from-behind commerce bank is going to get its time in the sun soon.






gibor said:


> This is why I'm not too happy about RY. Another problem that I have pretty big allocation % in RY, so afraid want to average down.
> 
> So far my favorite is BMO


Might be best not to average down if you already have a lot of shares, relative to your portfolio. Plus, as discussed in this thread, they failed bigtime in the US by selling their US business, and humble is right. They can't go to Europe now. 

I only have 50 shares of RY, and that's the way its going to stay - probably for a long time LOL. I don't plan to add any. If anything, I will sell when it hits $50 again.


----------



## Toronto.gal

gibor said:


> I have pretty big allocation % in RY, so afraid want to average down.


Do you drip it? If so, then your dividends would have bought you shares for just over $44 on Nov.24th. Granted this may not be great consolation, but at least it's not pure dead money.

Stay within your allocation, but you could trade the stock also to raise capital in the interim [I always trade a portion & use the profits to add to my position].

Regarding Europe [and Asia even], given the low prices there, you never know what RY might have in mind. If Sir Richard Branson has been able to pick up huge bargains, why not RY? 

*KaeJS:* hey, don't ridicule my bank; I can do multi-trades with one commission fee, you can't.


----------



## Toronto.gal

KaeJS said:


> I only have 50 shares of RY, and that's the way its going to stay - probably *for a long time*


At this price, you should have at least 100 if you want to hold for a long time, that way, you could have 104 after 4 q's.


----------



## KaeJS

Toronto.gal said:


> At this price, you should have at least 100 if you want to hold for a long time, that way, you could have 104 after 4 q's.


I am not currently dripping any of my holdings (except BMO) because I have margin to cover, unfortunately. 

After my margin is paid up, I will start dripping. 

If AAPL would just hurry up and get to $450, that would make things a lot easier.

I would sell AAPL and reduce my margin by $4500.


----------



## daddybigbucks

Uranium101 said:


> I have see TD's advancement in the US. our company uses TD bank in the US too. It is good that now Americans lose their confidences in their American banks. TD may be deemed as a trusted bank since it's Canadian.
> 
> .


Great point.


----------



## gibor365

Toronto.gal said:


> Do you drip it? If so, then your dividends would have bought you shares for just over $44 on Nov.24th. Granted this may not be great consolation, but at least it's not pure dead money.
> 
> Stay within your allocation, but you could trade the stock also to raise capital in the interim [I always trade a portion & use the profits to add to my position].


Yes, I DRIP it... and if RY won't cut and won't increase dividends, just in about 25 I will return my initial investment....

btw, yeasterday started to "thin my herd"  It's thiner now by 1 stock, sold SJR.B for small profit about 2.8% after commissions (mostly on dividends).
Now on this cash planning to buy more RCI.B or PG on pullback ....

T.Gal, I missed...at which bank you discount brokerage accounts?


----------



## Uranium101

Here are the reason why I sold RY when it was $54 earlier this year:

1) They are bunch of dinosaurs, which means lack of innovation. they just follow what others are doing.

2) Failed in the US - the worst part is that they got in when the market was hot, and went out at a loss when the market cools down.

3) Their credit card arm even have a Canadian Cellphone business with inferior products. just look at their plans and you will know why.

4) Trying to get into another hot market, the ETF market after other companies have made a killing. I believe they are late to the game again. I mean, Blackrock is the leader, and they have already dominated the market. Another example on why RBC is following the herd. Vanguard is coming to Canada. They are the leading issuers of lowest cost ETF in the US. Vanguard was founded by the legendary investor John Boggle.

5) Number of outstanding shares increases quarter by quarter even though they have announced numerous buyback programs. They haven't done any acquisitions; therefore, there shouldn't be increasing so fast. I believe most of the stocks goes to the stock options.


----------



## gibor365

Uranium101 said:


> Here are the reason why I sold RY when it was $54 earlier this year:
> 
> 1) They are bunch of dinosaurs, which means lack of innovation. they just follow what others are doing.


All Canadian banks are "bunch of dinosaurs"


----------



## humble_pie

hey let's not be disrespectful too soon. Banks are a bedrock of canada's economy. One can either stand on the sidelines & jeer or else one can go with the flow & benefit from a decent lifetime investment partnership. 

as has been mentioned upthread, historically none of the canadian banks stay down for long. Roybank will find its sea legs again. On the top floors of the RY twin glass towers on bay street right now, they are as smart & as competent as any bankers anywhere in canada. As t.gal says, nobody knows what acquisitions they're eyeing or what strategic new directions they're planning to take. But history strongly suggests that RY will rise again.

in fact, homer's point re super-appreciation for the dog of the bank stocks is interesting. I did quickly look back to comparative chartlines for td, ry, bmo & na since the 08/09 crash, especting to find that bmo had crashed the worst but come back the best. Instead i found that ry & bmo have more or less arrived to the same point together over 5 years, largely because of ry's recent slide (otherwise bmo would have occupied the position of best runner), while td has outperformed & na is a recent zoomer.

none of this is really surprising. This is the good thing about banks. They're not. really. surprising.


----------



## Dmoney

I'd be inclined to agree that they are dinosaurs, but dinosaurs that arent' going extinct anytime soon. I don't know about US banks or elsewhere, but from my experience with Canadian banks, it seems a lot of practices/software/processes are outdated and not particularly competitive. But, luckily, they don't have to be all that competitive to thrive in the oligopolistic Canadian banking environment.


----------



## Homerhomer

humble_pie said:


> in fact, homer's point re super-appreciation for the dog of the bank stocks is interesting. I did quickly look back to comparative chartlines for td, ry, bmo & na since the 08/09 crash, especting to find that bmo had crashed the worst but come back the best. Instead i found that ry & bmo have more or less arrived to the same point together over 5 years, largely because of ry's recent slide (otherwise bmo would have occupied the position of best runner), while td has outperformed & na is a recent zoomer.
> 
> none of this is really surprising. This is the good thing about banks. They're not. really. surprising.


http://www.theglobeandmail.com/glob...for-a-bank-stock-pick-a-loser/article1812486/

Here is a short article on the subject from a year ago, it alludes to 70% success rate, however last year's dog is this year's ugly mutt as well (RY), hence the dog outperforms the basket only 6 out of 11 times in the last 11 years, nothing to write home about however there may be something to be said about solid companies in solid industries, the weak performer and strong performer of the group often average out meaning the dog did better than the master.

The case can probably be made fro CP and CNR and few others in stable industries.


----------



## humble_pie

don't you think that a one-year time frame is far too compressed, though ?

i'd be inclined to think in half-decade swings, like 5 or 6 years ...

once a monster org is running ahead of the pack, like the td, it won't lose its momentum pfffffft, it'll stay out in front for quite a few years ... in the same way it'll take a few years for roybank to gain back its lustre imho ...


----------



## doctrine

RY does dilute its shares by 1% a year, but given its P/E of ~11, its profit per share is about 9%. I have seen companies dilute far more.


----------



## gibor365

Dmoney said:


> from my experience with Canadian banks, it seems a lot of practices/software/processes are outdated and not particularly competitive. But, luckily, they don't have to be all that competitive to thrive in the oligopolistic Canadian banking environment.


Not only... my wife and friends are working for top Canadian banks (and on pretty good positions), and bureaucracy over there is unbelievable....more than that, they fire the smartest people and promote less smart , but more politically correct guys.


----------



## Square Root

It's pretty easy to criticize the Cdn Banks. They are big bureaucracies and like most companies sometimes make mistakes. i know many execs from several banks and can say they are hard working, intelligent, very ethical people. Most analysts and investors believe the banks are generally well run. In comparison to banks in other countries this conclusion should be obvious. Over a very long period the banks as a group have delivered double digit total returns on average. I think TD has a good strategy and brilliant execution. If their US business continues to improve you should see very good results over the next several years. Ed Clark would appear to be far and away the best Bank CEO in Canada(maybe the world?). His decision to de-emphasize risky credit trading before the 2008 collapse meant that TD unlike its peers lost less than a quarter's earnings to write downs. 
Fourth quarter earnings beat expectations and the stock only seems to be held back by Europe at this point. May raise dividend again next quarter. I'm not selling any of mine.


----------



## Jungle

Profit up 43% and beat estimates:

http://www.theglobeandmail.com/globe-investor/rbc-profit-climbs-43-per-cent/article2257706/


----------



## Oldroe

That's great I'm almost done buying RY and I'm smart already.........if I could just get smart about buying Power Corp/financial maybe 3-4 more buys.


----------



## Homerhomer

humble_pie said:


> don't you think that a one-year time frame is far too compressed, though ?
> 
> i'd be inclined to think in half-decade swings, like 5 or 6 years ...
> 
> once a monster org is running ahead of the pack, like the td, it won't lose its momentum pfffffft, it'll stay out in front for quite a few years ... in the same way it'll take a few years for roybank to gain back its lustre imho ...


Very good point.

On the other hand I hear of folks playing it quarterly (anecdotal evidence since I have not done any calculations myself), I am guessing if one bombs after the earnings buy it, probably sell it before next earnings and buy the next dog.

Startegy better suited for sheltered accounts if at all.

I gather there are more than one way to skin the cat, and Canadian banks have proven to be a very solid investment over the years, I personally belive they will continue to do so albeit going forward we shouldn't count on the rate of returns we have enjoyed over the last few decades.


----------



## Toronto.gal

gibor said:


> 1. yesterday started to "thin my herd"  It's thiner now by 1 stock
> 2. at which bank you discount brokerage accounts?


1. I knew you would take hp's solid advice. 
2. CM.


----------



## Ihatetaxes

RY up almost 4% this morning. About time for some good news.


----------



## gibor365

Toronto.gal said:


> 1. I knew you would take hp's solid advice.
> 2. CM.


2. I have accounts in CM and TDW... I didn't know that you can do multiple trades and be charged only 6.95...do you have link on their official website where this indicated?


----------



## Toronto.gal

gibor said:


> 1. I didn't know that you can do multiple trades and be charged only 6.95
> 2. do you have link on their official website where this indicated?


1. How come you don't know the rules of your bank?!  [I have mentioned this fact at least 3x here].
2. Would you like me to hold your hand too? 

"Full commissions and fees apply for each partial fill, except when transacted within the same business day. *Commission charges will be consolidated at our discretion when multiple orders of the same type (buy vs. sell) are executed for the same security, within the same day, on the same exchange and in the same currency.* Some exceptions may apply. *Any consolidated trades will be treated as a single order for the purposes of trade counting."*

https://www.investorsedge.cibc.com/ie/benefits/fees-and-commission/commission-rates.html

*Note:* one fee applies per execution, hence if you buy same stock 3x and sell it 3x on the same day, you're charged $13.90

They charge you per trade on the day you trade, however, it is updated overnight and the following day you only see 1 fee per execution.

This works great when working with high volume as you can DCA that way, ie: if you buy 3,000 shares, you can enter 3 orders with 3 different prices [unless of course you're sure you have captured the lowest, but when does that happen?]. Also great if you do multiple trades on same stock for whatever other reason.

If you trade same stock under separate accounts on same day [as I normally do], the consolidated charge is per account, not per stock traded, so if you had bought/sold LLL twice under your TFSA/RRSP/NON-REG, your commissions would have been $41.70.


----------



## Betzy

Yeah RY, Sold my option I have been sweating over for the last week, kind of cool since I saw it going nuts at open and re adjusted my sell stop for an extra $400. Just in the lick of time First time doing that...
Sold out a DCA 100 shares for 46.28 few days ago, still holding 100 shares. Like the nice dividends they give me.


----------



## Uranium101

All of you wanted to jump in when RY hits 5% yield.
Its current dividend is 54 cents/quarter, so $2.16 a year.
Divide $2.16 by 0.05 and you get $43.20.
The stock hit the low of $43.30, did anyone get a chance to get in?


----------



## Assetologist

Close at $43.50 though not 2009 pricing.


----------



## londoncalling

I'm in at 44.75. If it hits 2009 levels I will back up the truck! Not that I want the market to head that direction.


----------



## KaeJS

I got in at $45.45, but I am actually seriously considering selling my position on Monday. 

More than likely, if the stock is in the green on Monday, I am dumping it.

Sayonara!


----------



## Uranium101

no hold and enjoy dividend mind set anymore?


----------



## KaeJS

I bought it for a flip, so that's the way it's going to stay.

I can buy it again at a lower price at a future date.


----------



## marina628

I am heavy on TD ,BNS and CM and own very little RY and BMO.I have no plans to buy any American banks and carry on with TD ,BNS AND CM like I always do.


----------



## Uranium101

Here is my portfolio:
T.MFC - 15%
T.BNS - 10%
T.CCO -20%
T.SU - 10%
T.AGU -5%
N.USG - 5%
N.BAC - 5%
N.FLR - 10%
N.BRK.B - 10%
N.EFX - 10%

I had like 20% cash before I spent it all during the last few months. Most of that money went into CCO. Down 15% this year.


----------



## Square Root

Only bank I don't own is CM. TD #1 and RY #2 positions. Very significant positions they are and eventually I would like to reduce and diversify more but since my cost base is so low it will cost a lot of tax to do so. Good problem to have I guess.


----------



## humble_pie

what's with the kiss-ry-&-run strategy.

ry is a stock to hold, sell otm options against, & totally forget about while turning attention to other things in life, like christmas trees.

anybody eyeing 4.5-5% on the div can boost this to 7-8% by selling a few calls n puts.

(note to square root: you have plenty of time at your young age to start working your cost base up by taking tiny capital gains one year at a time. Baby steps. Otherwise your heirs are going to be clobbered. I posted an illustration of this - coincidentally it happened to be an ry example - but you could just multiply 10 times for your gargantua-sized portf. Yes i know you don't like pair trades but wish to assure they are so-o-o fun.)


----------



## Square Root

humble_pie said:


> what's with the kiss-ry-&-run strategy.
> 
> ry is a stock to hold, sell otm options against, & totally forget about while turning attention to other things in life, like christmas trees.
> 
> anybody eyeing 4.5-5% on the div can boost this to 7-8% by selling a few calls n puts.
> 
> (note to square root: you have plenty of time at your young age to start working your cost base up by taking tiny capital gains one year at a time. Baby steps. Otherwise your heirs are going to be clobbered. I posted an illustration of this - coincidentally it happened to be an ry example - but you could just multiply 10 times for your gargantua-sized portf. Yes i know you don't like pair trades but wish to assure they are so-o-o fun.)


Thanks Humble. That is my plan. Don't mind pair trades. Did some a few months ago-sold MFC and SLF bought ENB looking brilliant so far.


----------



## KaeJS

I am still learning to play with options first before I dive in.

Don't want to screw up too bad as a first timer. 

And like I said, the only reason I am selling RY is because I feel I can get it again at a lower price in the future. It's high right now because of their earnings release, but they will fall back down eventually.

Probably some people looking to get out just like myself.


----------



## west5440

I'm sitting on 900 shares of RY.TO. My portfolio is 88% RY (so much for diversifying).

I'm certainly tempted to sell now and lock in my gains, but there does seem to be potential for further gains in the short term. We shall see.


----------



## Uranium101

KaeJS said:


> I am still learning to play with options first before I dive in.
> 
> Don't want to screw up too bad as a first timer.
> 
> And like I said, the only reason I am selling RY is because I feel I can get it again at a lower price in the future. It's high right now because of their earnings release, but they will fall back down eventually.
> 
> Probably some people looking to get out just like myself.


I suggest not to touch options lol. Every odds is against option buyers and sellers.

How come you are so certain that you will get RY at a cheaper price at a later date?

I got out of RY long ago at $55. Not to say that i did a good move, the proceeds from the sales of RY went into something that dropped 3x harder than RY lol. Failed.

Good luck with options, it is an exciting thing to get into. Just isnt for me after i calculated the odds and expenses.


----------



## Toronto.gal

Uranium101 said:


> the proceeds from the sales of RY went into something that dropped 3x harder than RY lol. Failed.


Ouch, what were the stocks, uranium?  [at least you have higher volume of shares now].  

Next time, try to time the swap better, ie: buy the stock after it drops [if you have a crystal ball of course]. 

I'm a big uranium stock trader btw, but this is not the thread for it.


----------



## KaeJS

In 5 days the stock has jumped 4 dollars.

Likewise, in 5 days the market has gone up considerably.

But when all this hocus pocus dies down and people realize we still have issues... RY will drop below $48 again.

I could be wrong. But even if I am wrong, it's not like the stock is going to skyrocket much more.

Uranium101, I don't know if you've seen some of my other posts, but I am borrowing quite a bit on margin at the moment. Selling RY would alleviate some of this margin, and although I don't stress over the market all that much, it would bring some more comfort in the event of another downturn, which I believe is just around the corner.

Another reason is that I have 110 shares of BMO and have this amount increasing every 2 weeks. As such, I want to make sure I don't overweight myself in the financial sector.

I feel there are also some better deals out there at the moment.

TCK.B was a nice deal last week, but I didn't jump in on it due to margin restrictions and that whole TSX glitch.

I've seen a couple of people trading TLM as well, which looks like a steal under $14.

There is nothing wrong with holding RY (nothing wrong at all, in fact), I just feel that it may be a better choice for me to sell my position as it relates to my own personal portfolio.


----------



## Uranium101

Toronto.gal said:


> Ouch, what were the stocks, uranium?  [at least you have higher volume of shares now].
> 
> Next time, try to time the swap better, ie: buy the stock after it drops [if you have a crystal ball of course].
> 
> I'm a big uranium stock trader btw, but this is not the thread for it.


Yeah, they went into CCO and MFC. hahaha. and dropped a lot harder than RY.

Let's move to the CCO thread and discuss uranium and nuclear.


----------



## KaeJS

Toronto.gal said:


> Ouch, what were the stocks, uranium?





Uranium101 said:


> Yeah, they went into CCO and* MFC*. hahaha. and dropped a lot harder than RY.


T.Gal knows all about MFC.


----------



## gibor365

3 times harder than RY probably was hit only YLO and Sinoforest


----------



## gibor365

KaeJS said:


> TCK.B was a nice deal last week, but I didn't jump in on it due to margin restrictions and that whole TSX glitch.
> 
> I've seen a couple of people trading TLM as well, which looks like a steal under $14.
> 
> There is nothing wrong with holding RY (nothing wrong at all, in fact), I just feel that it may be a better choice for me to sell my position as it relates to my own personal portfolio.


My opinion that some stocks are for buy and hold and add on dips, others for trade, and 3rd for long hold (but with tight stops) RY is more 1st category, TCK.B more 2nd, LNV - 3rd...
btw, I bought TCK.B beginning of the week, together with XMA and PG... TCK.B was pretty good jump so far, XMA - not so good , PG is also not bad.

For RY in order thread i posted calculations for your return (even w/o RY increasing dividends) - it's not bad hold


----------



## KaeJS

gibor said:


> btw, I bought TCK.B beginning of the week
> 
> For RY in order thread i posted calculations for your return (even w/o RY increasing dividends) - it's not bad hold


Very nice play on Teck. 

And yes, the return is not bad. At my price, its a 4.75% yield.


----------



## Jungle

In the last 10 years, RY has given a 98% return (without dividends!) and the TSX comp has delivered 62%, without dividends.

With dividends this could be around 140+%!


----------



## Uranium101

Jungle said:


> In the last 10 years, RY has given a 98% return (without dividends!) and the TSX comp has delivered 62%, without dividends.
> 
> With dividends this could be around 140+%!


we need to compare RY to other banks, not with the overall index.


----------



## Eder

KaeJS said:


> It's high right now because of their earnings release, but they will fall back down eventually.


It's low.


----------



## gibor365

Jungle said:


> In the last 10 years, RY has given a 98% return (without dividends!) and the TSX comp has delivered 62%, without dividends.
> 
> With dividends this could be around 140+%!


did calcs for RY with DRIPing dividends...., if you buy it at $47 and price and dividends don't change, in 10 years you will make 30%, in 15 years - 56%, in 20 - 87%


----------



## Jungle

Just using google and going back 10 years today, it says :

BNS 100% 
RY 98%
TD 84%
BMO 72%
CM 32%

Not including dividends over 10 years! This would be a lot of work to figure out. 

I was reading some articles on Td Waterhouse research and they were saying there is a lot of money to be made in the wealth management. 

BNS just picked up Dundee recently. 

We know past performance does not mean anything in the future, however 15% annual return is very good.


----------



## Jungle

gibor said:


> did calcs for RY with DRIPing dividends...., if you buy it at $47 and price and dividends don't change, in 10 years you will make 30%, in 15 years - 56%, in 20 - 87%


Do you know how to figure out the return + dividends reinvested starting 10 years ago and holding until today?


----------



## Jungle

Using the same google chart above, at the peak in April 2011, RY was up 143% and BNS was 135%. Again no dividends. 

Wish I was long RY in 2001!


----------



## Lephturn

Uranium101 said:


> I suggest not to touch options lol. Every odds is against option buyers and sellers.
> 
> How come you are so certain that you will get RY at a cheaper price at a later date?
> 
> I got out of RY long ago at $55. Not to say that i did a good move, the proceeds from the sales of RY went into something that dropped 3x harder than RY lol. Failed.
> 
> Good luck with options, it is an exciting thing to get into. Just isnt for me after i calculated the odds and expenses.


Because of my use of options, I simply sold my puts for a nice profit and took the proceeds plus my dividends and bought more stock. I'll put protection in place again when it makes sense to do so - but my use of options protects me from large losses and lets me use price drops to juice my returns.


----------



## Uranium101

Lephturn said:


> Because of my use of options, I simply sold my puts for a nice profit and took the proceeds plus my dividends and bought more stock. I'll put protection in place again when it makes sense to do so - but my use of options protects me from large losses and lets me use price drops to juice my returns.


when you write puts, do you have to have enough margin to do so?
What if the market went crazy (the one back in May 2010), and your put got exercised? I thought about writing puts, but I wouldn't do it because it's not European style which buyers can only exercise their options at a fixed date, or few days before that. North American puts can be exercised any time before expiry. that is biggest deal breaker for me.


----------



## humble_pie

uranium the remarks you are making about options are untrue & certainly do betray that you don't trade these.

it makes little difference whether options are euro or american. Nearly always, there is enough tv (theoretical or time value) in an option premium to prevent an itm american option from being exercised prior to expiration. Put another way, the long holder of the option will usually benefit more by selling his call or his put to the bid instead of exercising, even when a dividend X date is looming.

there are simple formulas - one for calls, the other for puts - that help to determine if an option bid includes enough premium to prevent assignment. I've posted these formulas twice, recently.

in cameco btw i wouldn't go long the stock because the dividend is too low to get excited about. I'd put on a bullish call spread in US ccj instead.

and yes, brokers always make sure that option sellers have sufficient margin.


----------



## Uranium101

humble_pie said:


> uranium the remarks you are making about options are untrue & certainly do betray that you don't trade these.
> 
> it makes little difference whether options are euro or american. Nearly always, there is enough tv (theoretical or time value) in an option premium to prevent an itm american option from being exercised prior to expiration. Put another way, the long holder of the option will usually benefit more by selling his call or his put to the bid instead of exercising, even when a dividend X date is looming.
> 
> there are simple formulas - one for calls, the other for puts - that help to determine if an option bid includes enough premium to prevent assignment. I've posted these formulas twice, recently.
> 
> in cameco btw i wouldn't go long the stock because the dividend is too low to get excited about. I'd put on a bullish call spread in US ccj instead.
> 
> and yes, brokers always make sure that option sellers have sufficient margin.


You must be talking about short term options. I want to write long term put options that stretch out 5-10 years until the expiry date. I do not participate in the option market whatsoever; however, I am intended to learn something about it. Since I do not want to use margin, having it won't hurt. I am trying to use this method to get a interest free or low interest loan. if you know what I mean.

Just wondering, seriously? people won't exercise their put options if the price dropped 40% below the strike price all the sudden in a day? you must be kidding right?


----------



## humble_pie

no. i. am. not. kidding.

stk could drop by 40% but as long as tv premium remained in the option bid it would be most unlikely to be exercised. In fact the very volatility of a sudden drop like that would heft the option premium considerably.

there are no 5-year or 10-year puts. Specialty lombard street options can be specifically created for an institution wishing to take a position in the same but these are institutions with extremely large deals, not retail clients.


----------



## Uranium101

thanks humble pie for all that info.

I thought my plan was too good to be true.
Just wondering, what is the maximum length of time for an option to be written?

thanks again,


----------



## humble_pie

options on organized exchanges go as far out as january 2014. There are a few (montreal exchange) expiring in march 2014.

here is an excellent short publication about options, from the montreal exchange. Scroll down the left column to "equity derivatives" & click "equity options reference manual." Don't even think of putting a call before you check out this little gem.

http://m-x.ca/educ_guides_strat_en.php

there are also good teaching webinars & videos on the montreal exch website. It's m-x.ca.

LEAPs options - long-term options expiring in 2013 or 2014 - are something to be cautious & wary about because the spreads between bids & asks can be atrocious, particularly on montreal.


----------



## Toronto.gal

Gibor, I reckon you're 1/2 smiling today.


----------



## al42

wow ...what is going on with RBC today?
Decided to take profit, hopefully I can get back in when it drops again.
I started buying at $48.00 and bought more at $46.00 and my last buy was at $44.00.


----------



## Homerhomer

al42 said:


> wow ...what is going on with RBC today?
> .


Year end windows dressing, all the MM managers don't want to look that dumb on the annual report


----------



## Toronto.gal

Doesn't matter the reasoning at this point, just book some profit! [if you can].

Merry Christmas!


----------



## newbie

Toronto.gal said:


> Doesn't matter the reasoning at this point, just book some profit! [if you can].
> 
> Merry Christmas!


good thinking
that is what i would do with this light volume if i owned any banks.
one may be surprised as next year comes .
happy holydays


----------



## Eder

I will wait for $60 to sell. Forward PE is less than 10 right now...historical PE is much higher.


----------



## Ihatetaxes

Sold 400 shares about 20 minutes ago for $50.70 to take some profits (about 6% over cost since buying in August) and reduce overall exposure to financials. With so much XDV and XIU in my accounts I had way too much RY already.


----------



## Toronto.gal

Eder said:


> I will wait for $60 to sell. Forward PE is less than 10 right now...historical PE is much higher.


The shares were in the $60's this past May, so it should get up there again eventually, though perhaps not as fast as you may think [hope] however, I could not resist and sold a tranche. 

Well done Ihatetaxes!


----------



## Eder

Toronto.gal said:


> The shares were in the $60's this past May, so it should get up there again eventually, though perhaps not as fast as you may think [hope] however, I could not resist and sold a tranche.


Ya... I sold most of my position in Spring at over $60...bought back in after earnings disappointed at $55 and have been buying steady down to $45... I think selling some here is a good move for everyone other than me.


----------



## al42

Toronto.gal said:


> Doesn't matter the reasoning at this point, just book some profit! [if you can].
> 
> Merry Christmas!


Sure did...10% profit for 3 months plus 1 dividend payment.

Picked up a little BMO @54.95, seems undervalued like RY was a few months ago.


----------



## jtc

Down a few % these past couple days.

Picked up 400 shares for the upcoming dividend!


----------



## al42

Had a sell order in for BMO @ $57.95 that got triggered today.
Quick 5% gain in a couple of weeks.
Looking to get back into RY but I'm going to wait a bit to see if it pulls back to $47.00 - $48.00.


----------



## Jungle

This has been on a little tear lately. Looks like it was a good buy at $44!


----------



## Ihatetaxes

Kicking myself for selling the big 2000 share chunk I held shortly late Fall. Made a couple grand in a day but by now would be more like $25k. Still have 200 shares so not all is lost...


----------



## m3s

I bought in at $45 up 23% in a few months and not selling. Made that mistake when I sold BCE after a similar run up.


----------



## Toronto.gal

Ihatetaxes said:


> Made a couple grand in a day but by now would be more like $25k. Still have 200 shares so not all is lost...


What did you do with the $2K profit + capital returned since last Fall? Good you kept a tranche at least.

Last year, thanks to the considerable price drop, I bought all the RY shares I want/need; reached my goal in just over 2 years with this one, now the dividends can buy the rest. Now I'm working on same goal with BNS, then BMO.


----------



## Jungle

And at those prices (mid 44-45) the dividend is almost 5%! I'll sit on this one too and collect dividends.


----------



## marina628

I bought 100 shares late September and paid $47.16 ,I have total 180 shares now .


----------



## Jungle

RY increases dividend 6% !!!! 

YEAAAA


----------



## Square Root

I suspect a lot of you shorter term traders end up missing the dividend? As a retiree these divs are really nice. Don't care much about the actual price of the stock.


----------



## Jungle

The growth on the dividend is where it's at. I'm not talanted enough, or have the risk tolerance to buy or find riskier growth stocks. I just like companies that have a history of increasing their dividends.

For example, Warren Buffet says the growing dividends from his Coca Cola stock he bought in 1994 have now paid off the shares.


----------



## KaeJS

!

The pressure is really on for BMO to increase now.

I wish I hadn't sold my RY for a quick profit. I should have held that sucker!


----------



## humble_pie

what's with all the jollity. What the banks are telling me this week is that they're running into resistance & growth is going to be difficult.

this is without considering any negative effect from potential bank disasters in europe.

dividend increases are the kool-aid.

would i sell bank stocks. No, i never sell bank stocks. But i think there'll be months to come with good opportunities to acquire. After folks have sobered up from the kool-aid.


----------



## Square Root

I think the banks like to under promise and over deliver. Clark in particular is always talking about the challenging year ahead. A Stopped clock will be right twice a day. In any event they are really performing well. The ROE for TDCT is 44.9% earnings growth is 11%. This has got to be one of the world's greatest businesses. TD USA also doing quite well and is getting close to earning it's cost of invested capital. Europe has little impact on TD while more for RY.


----------



## londoncalling

KaeJS said:


> !
> 
> The pressure is really on for BMO to increase now.
> 
> I wish I hadn't sold my RY for a quick profit. I should have held that sucker!


I wasn't sure what effect RY's and TD's reports would have on BMO. I took a guess that BMO would open lower drop in the first hour of market mania then rise. Unfortunately, it didn't quite drop as far as my order. Missed it by 2 pennies. Such is life. I am sure there will be more chances. I would agree that BMO has increased pressure to raise the divvy. However on a yield basis BMO is currently yielding higher than TD and RY by about 1%. Now deciding what to do with my RY that I bought at 44.75 is gonna be the focus of my day


----------



## humble_pie

there you go again. Who said anything about suckers betting against the banks.

i'm keeping all my bank shares. Think there'll be opportunities to add more in the months ahead. Don't see reason for whoopee myself but welcome your great views.

PS these cracks at media & suckers are so unlike you sqare root. What has come over you this morning.


----------



## Square Root

humble_pie said:


> there you go again. Who said anything about suckers betting against the banks.
> 
> i'm keeping all my bank shares. Think there'll be opportunities to add more in the months ahead. Don't see reason for whoopee myself but welcome your great views.
> 
> PS these cracks at media & suckers are so unlike you sqare root. What has come over you this morning.


I guess the results are going to my head. Reacting a bit to the bank bashers, sorry.


----------



## Square Root

KaeJS said:


> !
> 
> The pressure is really on for BMO to increase now.
> 
> I wish I hadn't sold my RY for a quick profit. I should have held that sucker!


BMO has to increase earnings before they can raise the dividend. i would recommend you view the banks as a long term hold. I have sold bank shares only a few times and I always ended up being sorry that I did. These shares would be a great foundation for a long term retirement portfolio.


----------



## Ihatetaxes

Toronto.gal said:


> What did you do with the $2K profit + capital returned since last Fall? Good you kept a tranche at least.
> 
> Last year, thanks to the considerable price drop, I bought all the RY shares I want/need; reached my goal in just over 2 years with this one, now the dividends can buy the rest. Now I'm working on same goal with BNS, then BMO.


Bought $2k worth of DEM that is up about 15% since I bought it in December but not up as much as RY!!!!


----------



## Eder

I'm glad RY & TD are doing well, and doing their job including returning profits back to us risk takers.

We often put too much stock in media touts that were putting "don't buy" and "hold" recommendations on RY when it was bouncing off $45 and undoubtedly will put a "top pick" recommendation when RY hits $60.


----------



## humble_pie

_" We often put too much stock in media touts that were putting "don't buy" and "hold" recommendations on RY" _

those were *not* media touts putting any recommendations on anything.

it's the analysts who recommend.

it's the media who report what they say.

the media report scrupulously within quotation marks & they attribute their quotes back to specific analysts, so anyone & everyone can see the difference.

imho the big media do a conscientious job reporting the news, including reporting what significant analysts have to say.


----------



## blin10

Jungle said:


> The growth on the dividend is where it's at. I'm not talanted enough, or have the risk tolerance to buy or find riskier growth stocks. I just like companies that have a history of increasing their dividends.
> 
> For example, Warren Buffet says the growing dividends from his Coca Cola stock he bought in 1994 have now paid off the shares.


royal bank is not coca cola...


----------



## Square Root

blin10 said:


> royal bank is not coca cola...


Maybe not but at 4% yield the purchase price is "paid off" in 25 years.


----------



## blin10

Square Root said:


> Maybe not but at 4% yield the purchase price is "paid off" in 25 years.


tell that to shareholders of citi or bank of america or lehman brothers...


----------



## Square Root

blin10 said:


> tell that to shareholders of citi or bank of america or lehman brothers...


Why would I do that?


----------



## londoncalling

Are you suggesting RY and TD are going to have a Lehman experience because they increased their dividends this quarter?  Please explain. The Canadian banks operate much differently than the US banks circa the Lehman era. I'm quite certain our lending rules are way more stringent than what was being done in the US at that time. In that regard RY is closer to Coca Cola than it is to Lehman and I would agree that RY is not Coca Cola as you mentioned up thread. If you are saying investors should not buy based on dividend increases or yield alone than I would wholeheartedly agree. One should not base any of their investing decisions on only one metric. That is an absurd strategy and bound to result in disappointment.

I bought RY at 44.75 back in Nov because I thought it was fairly to undervalued as a long term hold. At that time it was yielding 4.8% which I felt was a good sustainable yield. The current increase would not make me want to buy more shares but it is appreciated as a shareholder. Are you implying that this increase is unaffordable?


----------



## Toronto.gal

Blin10: do you own any RY shares?


----------



## Jungle

I know coca cola has had a long history of dividend growth so I used that as an example of how powerful dividend growth can be. I was not saying they are the same companies.. Sorry for the confusion!


----------



## Eder

humble_pie said:


> _" We often put too much stock in media touts that were putting "don't buy" and "hold" recommendations on RY" _
> 
> those were *not* media touts putting any recommendations on anything.
> 
> it's the analysts who recommend.
> 
> it's the media who report what they say


Sorry,I should have called them analysts that tout the stocks they need to sell to various unsuspecting media?

At any rate a contrarian view to much of the printed drivel has been rewarding for me,


----------



## londoncalling

Jungle said:


> I know coca cola has had a long history of dividend growth so I used that as an example of how powerful dividend growth can be. I was not saying they are the same companies.. Sorry for the confusion!


Your post did not confuse me. I think the correlation between the dividend growth rates is a better comparison of the companies than to say RY is likely to have the same end result as Lehman.


----------



## Toronto.gal

Eder said:


> At any rate a contrarian view to much of the printed drivel has been rewarding for me,


And for me too [except in a case or two].


----------



## Eder

Toronto.gal said:


> And for me too [except in a case or two].


I know you have a fast trigger finger so doubt you get hurt much.


----------



## Jungle

Canacord Centry has just upgraded RY to a buy with a $66 target price.


----------



## blin10

i'm not saying not to buy it's just very hard for banks to grow, sure it's nice for people who been holding for a long time, but getting them at this price right now might not be the smartest move especially when markets at 52 week high...



londoncalling said:


> Are you suggesting RY and TD are going to have a Lehman experience because they increased their dividends this quarter?  Please explain. The Canadian banks operate much differently than the US banks circa the Lehman era. I'm quite certain our lending rules are way more stringent than what was being done in the US at that time. In that regard RY is closer to Coca Cola than it is to Lehman and I would agree that RY is not Coca Cola as you mentioned up thread. If you are saying investors should not buy based on dividend increases or yield alone than I would wholeheartedly agree. One should not base any of their investing decisions on only one metric. That is an absurd strategy and bound to result in disappointment.
> 
> I bought RY at 44.75 back in Nov because I thought it was fairly to undervalued as a long term hold. At that time it was yielding 4.8% which I felt was a good sustainable yield. The current increase would not make me want to buy more shares but it is appreciated as a shareholder. Are you implying that this increase is unaffordable?


----------



## blin10

Toronto.gal said:


> Blin10: do you own any RY shares?


I did but sold ry to get more ipl when it dipped to 17.5


----------



## gibor365

blin10 said:


> i'm not saying not to buy it's just very hard for banks to grow, sure it's nice for people who been holding for a long time, but getting them at this price right now might not be the smartest move especially when markets at 52 week high...


TSX is down about 10% from 52 weeks high (as well as majority of CAN banks)


----------



## HaroldCrump

gibor said:


> TSX is down about 10% from 52 weeks high (as well as majority of CAN banks)


Buy in Dec, sell in Feb and go away.
That seems to be the new mantra.
It's better than the previous one because you get an extra 3 months off.


----------



## Jungle

Buy gold and Apple


----------



## blin10

gibor said:


> TSX is down about 10% from 52 weeks high (as well as majority of CAN banks)


nobody goes by what TSX does it's just a follower, whole world goes by usa markets


----------



## Jungle

I dedicated this thread and the above statement to the Kool Aid man:










Cheers!


----------



## Eder

Eder said:


> I'm glad RY & TD are doing well, and doing their job including returning profits back to us risk takers.
> 
> We often put too much stock in media touts that were putting "don't buy" and "hold" recommendations on RY when it was bouncing off $45 and undoubtedly will put a "top pick" recommendation when RY hits $60.


haha christine poole jumped the gun & put the buy on at $57...I'm sure some others will jump in soon.


----------



## doctrine

I cannot believe how long this stock was trading in the $43-47 range. 

I bought RY a year ago at $56.93

Then I bought at $49.63 when it fell. I bought again at $47.90 when it kept falling.

Now it's closed today at the same price I bought it a year ago at $56.93. With the dividends, my return is 12%. 

Investing is so easy.


----------



## Jungle

Good stuff^

Royal Bank has raised it's dividend 14% in two years. Looking forward to more dividend increases.


----------



## Lena100

Just started investing and was wondering if $73.54 is a good entry point ? Would like to build a position in all the 5 big banks. Thanks


----------



## godblsmnymkr

earnings tomorrow. i really dont know enough about RY since my adviser bought if for me awhile ago. anyone know what to look for in earnings? on the plus side, its down so much from here that if it misses it probably wont get hit too hard. i guess i'm holding on to it for awhile regardless as its now an accidental high yielder and I dont want to sell down here at these leve.s


----------



## londoncalling

godblsmnymkr said:


> its down so much from here that if it misses it probably wont get hit too hard.


Not necessarily. BMO beat today. If RY misses it will not be good for the share price. Had BMO disappointed the expectation may have been the same for RY to miss.

Cheers


----------



## godblsmnymkr

londoncalling said:


> Not necessarily. BMO beat today. If RY misses it will not be good for the share price. Had BMO disappointed the expectation may have been the same for RY to miss.
> 
> Cheers


i mean, its -29% from 2014 high. its back at prices from 2009. its a cash generating business. the scary part, is technically its in no mans land and its falling like its an oil stock.


----------



## 1980z28

Boost dividend .02 Cents to .79


----------



## 0xCC

godblsmnymkr said:


> i mean, its -29% from 2014 high. its back at prices from 2009.


Hardly. RY started 2009 in the $36 range and finished it in the $55 range. It didn't break $70 until November of 2013. Here in the low $70's we are a long, long way from 2009 prices. Also the 2014 high was in the high $83's, here in the mid-$72's that is about 13%-14% lower than the high.

Edit: Here is a link that shows the data I am talking about here: http://www.google.com/finance?chdnp...dLine&q=TSE:RY&ntsp=0&ei=isfdVanpHueZe4Hds_gP


----------



## cashinstinct

Why is the stock down 1.7% as of 10:21 this morning? (compared to 0.5% down for XIC).

Seems like the results were good... Mr. Market expected more ?

Note: not involved in the stock at all, simply curiosity


----------



## gibor365

cashinstinct said:


> Why is the stock down 1.7% as of 10:21 this morning? (compared to 0.5% down for XIC).
> 
> Seems like the results were good... Mr. Market expected more ?
> 
> Note: not involved in the stock at all, simply curiosity


Have the same question... just don't get it .... in ZEB is up...


----------



## 0xCC

It might be related to loan loss provisions for energy sector loans going up. Maybe the market expects those provisions to continue to go up as oil prices stay low.

From http://finance.yahoo.com/news/rbc-reports-higher-energy-sector-113603408.html :


> Royal Bank of Canada on Wednesday reported a sharp spike in bad loans in the oil-and-gas sector, while strength in personal and commercial banking helped Canada's biggest lender post a higher third-quarter profit.


----------



## godblsmnymkr

0xCC said:


> It might be related to loan loss provisions for energy sector loans going up. Maybe the market expects those provisions to continue to go up as oil prices stay low.
> 
> From http://finance.yahoo.com/news/rbc-reports-higher-energy-sector-113603408.html :


nice catch. ill skim their report later.


----------



## doctrine

RY is down because growth was down. RY had traded at a premium for a while. Why own RY at $1.65 a share in Q2 at 4% growth and $72/share when you can own BMO at $1.86 a share and 8% growth at $71/share?


----------



## gibor365

doctrine said:


> Why own RY at $1.65 a share in Q2 at 4% growth and $72/share when you can own BMO at $1.86 a share and 8% growth at $71/share?


 Than better to own NA  in any case I hold all big 6 with similar allocation


----------



## millmillmillion

gibor said:


> Than better to own NA  in any case I hold all big 6 with similar allocation


why not buy CM at 2.45$ with 6% growth and crazy dividend hike and buy backs. check out the news today


----------



## 0xCC

millmillmillion said:


> why not buy CM at 2.45$ with 6% growth and crazy dividend hike and buy backs. check out the news today


I'm not sure I would classify a $0.03 dividend increase from $1.09 to $1.12 a "crazy dividend hike". That is a 2.75% increase, just a little more than RY's 2.6% increase yesterday.

I don't follow CM so I can't say if the buyback falls into the "crazy" category.


----------



## millmillmillion

yup . but CM has been raising dividend every Q since last year , RY raised only twice 

RY = buy back since 2011 is 1.8 billion
CM = buy back since 2011 is 2.6 billion

less share float means better SP appreciation and more dividend hike

thats not included today's buy back announcement


----------



## godblsmnymkr

RY up big today


----------



## 1980z28

Will look at another 300 shares to purchased at the 71.00 mark or less


----------



## 1980z28

Sold all my RY today at 75.50

Will stock up on some cash for future


----------



## 1980z28

Found myself in the buying position today,on the dip @ 74.00


----------



## favelle75

1980z28 said:


> Found myself in the buying position today,on the dip @ 74.00


Nice. Same here.


----------



## treva84

All banks got hit hard yesterday, with RY being down the most (- 3.62%). At one point it was trading in the high 66.xx, closing at 67.05. 

I think it's been unduly hit hard over oil fears. I bought more with the sell off (attractive valuation; on pace for record profits in 2015; wide moat; stable dividend). What do you guys think?


----------



## celishave

treva84 said:


> All banks got hit hard yesterday, with RY being down the most (- 3.62%). At one point it was trading in the high 66.xx, closing at 67.05.
> 
> I think it's been unduly hit hard over oil fears. I bought more with the sell off (attractive valuation; on pace for record profits in 2015; wide moat; stable dividend). What do you guys think?


The banks are getting close to their 2008 depths re dividend yields. Have been adding to all my banks recently


----------



## Pluto

treva84 said:


> All banks got hit hard yesterday, with RY being down the most (- 3.62%). At one point it was trading in the high 66.xx, closing at 67.05.
> 
> I think it's been unduly hit hard over oil fears. I bought more with the sell off (attractive valuation; on pace for record profits in 2015; wide moat; stable dividend). What do you guys think?


Yes, oil fears seem to be a factor. Too, earnings season is here. TSX stocks are not immune to US events, and right now I'm thinking of INTEL earnings and guidance: guidance (future) is poor. That was a real stink bomb which implies that the problems have now spread to TECH. The cloud has more than enough capacity, so that business is slow. Oil problems, tech problems, what's next? the more problems, the worse the downdraft. When the titanic sinks, lots of stuff not directly attached gets dragged down too, and I believe RY is some of the stuff. 

Too, I'm looking at the sentiment in the selling. The sentiment lacks panic, fear, the sky is falling, all is lost ideas. Still too complacent. I just think there is more on the downside, although it may take some time to play out with a rebound in the meantime. 

RY's PE averages about 11.5. Currently at about 10.3. That's good - you are buying with the p/e below average. It's lowest p/e in fairly recent times was 7.4 at the 2009 bottom. Likely will not get that low this time, but under 10 is, I think very probable and under 9 realistic. You are looking at 2015 RY earnings. Markets look forward, not back ward and things are always rosy at the top. That'w why cdn banks topped out in fall 2014 despite a very good 2015, as you say, record profits for RY, in earnings. 

You will do well. RY is a survivor, and you have the where with all to get in there and buy on horrible days. that's a big plus. I'm just not convinced the down draft is over. As always there will be a pause, or rebound, then at some point, general panic selling. That's what I want to see. For me, on the banks, at minimum, I want to see p/e < 10 and yield > 5. Looks like RY, BMO and TD are yet to cave to that level.


----------



## james4beach

Why would you guys add to your bank exposure as the economy slows down? Bank equities have increased tremendously since 2009... if anything this is the time to cash out gains. That kind of performance is not a perpetual thing.

Once the commodities slowdown goes through the broad economy, other business will slow down and real estate is at great risk. If there's a bear market in housing, all bank stocks will decline.


----------



## Oldroe

James this is why you will never be investor.

The time to sell was 2 years ago and the time to buy is on the horizon. For me, a new investor can follow to market if they have enough money.


----------



## james4beach

Let me get this straight, now that commodity prices are crashing and the global economy is slowing, _you think a new golden era in bank profits is just starting?_

Here's the time line I see with a link to the chart

2003-2007: bull market in banks
2007-2009: bear market
2009-2015: bull market (_an extremely strong run by historical standards_)
2015- : bear market starts

That last bull run we had was one of the strongest by historical standards, both in stock price growth rate but also in bank profits and derivatives expansion. It's simply because the global banking world was flooded with cheap money and stimulus.

I think we're at the start of a bear market, which means you're buying at the top.

Even if I'm wrong and it's a _continuation_ of the bull market, the banks need continuous massive stimulus to perform like they have in the past. This is not organic growth and never was. They've gotten pumped up sky high, and they need more massive central bank stimulus to keep performing like this.


----------



## Killer Z

James, respectfully, I believe most on this forum purchase the banks as a long term hold. If that is one's position, the strategy is simple: *add to them when the price comes down, and ignore the noise*. 

Obviously there may be more down slide to come, all signs point to the same. However, market timing is not necessary for most investors on this forum. The banks are cheap right now, and the dividends are attractive. The banks may get cheaper and their dividends may get more attractive, but that only matters should one wish to play that game.

Keep investing simple. Just my $0.02.


----------



## dubmac

my 2 cents. 
The top of the market was Sept 2014 followed by a nice bounce ending in April 15. Since then, market top, market has dropped -23%. Now in the early stages of a bear that will last likely 2 years (JMO).
All the write-downs and all the red ink will make headlines from now until early Sept. - who knows where the bottom is - maybe TSX 10K? - IDK
If I can pick up some bank stocks (TD) when fear grips the market - likely 2nd half 16 - to early 2017, then I'd be a happy man. I have some powder dry and ready- but my TFSA is -3% or so with commodities drop. I agree with Killer Z - but won't buy banks until the rumours start on their earnings.


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## james4beach

Two comments to the above. (1) corrections or bear markets following _insanely strong runs_ tend to be particularly long and brutal. This has played out countless times through market history. The Canadian banks have been insanely strong stocks for a prolonged period. This sets them up for really big losses, potentially.

They are also way too popular, as far as stocks go. Just read through this forum for the last few years and see how popular bank stocks are.

(2) Killer Z says the strategy is simple, "add to them when the price comes down, and ignore the noise". But let's not delude ourselves about what this is ... it's not some kind of couch potato or broad asset allocation strategy. Rather, what Killer Z and others in this thread describe is a speculation on a specific sector.

*You think this sector will continue to show unusually high returns. If you didn't think that, you'd buy XIU instead.* The dividends are a moot point as XIU pays dividends too, and it's total returns in the end.

So let's all be clear: everyone is speculating on the sector. My speculation is that the prices will stay depressed for a few years and are even at significant risk of a prolonged decline. We are all doing sector speculation here, mine is just a dissenting view.


----------



## treva84

james4beach said:


> Two comments to the above. (1) corrections or bear markets following _insanely strong runs_ tend to be particularly long and brutal. This has played out countless times through market history. The Canadian banks have been insanely strong stocks for a prolonged period. This sets them up for really big losses, potentially.
> 
> They are also way too popular, as far as stocks go. Just read through this forum for the last few years and see how popular bank stocks are.
> 
> (2) Killer Z says the strategy is simple, "add to them when the price comes down, and ignore the noise". But let's not delude ourselves about what this is ... it's not some kind of couch potato or broad asset allocation strategy. Rather, what Killer Z and others in this thread describe is a speculation on a specific sector.
> 
> *You think this sector will continue to show unusually high returns. If you didn't think that, you'd buy XIU instead.* The dividends are a moot point as XIU pays dividends too, and it's total returns in the end.
> 
> So let's all be clear: everyone is speculating on the sector. My speculation is that the prices will stay depressed for a few years and are even at significant risk of a prolonged decline. We are all doing sector speculation here, mine is just a dissenting view.


As mentioned, I bought RY and I defiantly don't think I'm a speculator. A speculator is someone who tries to predict the future; an investor is someone who recognizes he or she cannot predict the future so they don't even bother; rather they make a decision based on what is in front of them. 

For example, I mentioned in my previous post why I bought RY - basically it has attractive valuation. It may go down in the short - medium term but I don't really care. In the long run it's been shown to be a profitable business that adapts well to the economic conditions, whatever they may be. I didn't buy it because I think it will "out perform", I bought it because I think it's a good deal. Will there be better deals in the future? Maybe - but as I mentioned I'm not a speculator.


----------



## humble_pie

dubmac said:


> my 2 cents.
> The top of the market was Sept 2014 followed by a nice bounce ending in April 15. Since then, market top, market has dropped -23%. Now in the early stages of a bear that will last likely 2 years (JMO).
> All the write-downs and all the red ink will make headlines from now until early Sept. - who knows where the bottom is - maybe TSX 10K? - IDK
> If I can pick up some bank stocks (TD) when fear grips the market - likely 2nd half 16 - to early 2017, then I'd be a happy man. I have some powder dry and ready- but my TFSA is -3% or so with commodities drop. I agree with Killer Z - but won't buy banks until the rumours start on their earnings.



i'm tending to agree with this forecast


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## james4beach

As well-informed investors, what is your assessment of the derivatives risks that Royal Bank has taken on?

In less than 5 years, RBC has gone from $7 trillion notional derivatives to currently over $13 trillion, off balance sheet. Is this something that gives you concern? In just a handful of years they have doubled their derivatives exposures. Those exposures are very challenging to manage during market downturns and can cause a bank to incur huge surprise losses.


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## humble_pie

canadian markets are largely energy plus banks, the energy sector is already a public wreck. Bank stocks may be beginning a downward drift, in their turn.

just one story among many - the financial post - says the canadian banking sector is looking tepid.

_"Canadian banks have been seeking to curtail expense growth to keep in line with slowing domestic banking earnings as the country’s economy sputters and borrowing by over-indebted consumers slows."_

http://business.financialpost.com/n...t-jobs-in-6-years-amid-digital-banking-threat


in addition to slowed consumer borrowing, there's vanished borrowing from the energy sector. There's competition from all the upstart online banks that are drawing deposits away from the big 5. Then there's the big boogeyman who's always waiting. Waiting for a plunge in housing prices.


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## james4beach

Full disclosure: I plan to short the first or second major rebound in Canadian bank shares. For example a rally that takes XFN above $29 is the kind of thing I'm looking for. I will also be watching this forum for hyper-optimisim about bank stocks. Those are the kind of conditions that will make me short the banks.


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## dubmac

james4beach said:


> Those exposures are very challenging to manage during market downturns and can cause a bank to incur huge surprise losses.


...then, if the stars align perfectly, I will buy RY when the stock price tanks...


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## AltaRed

humble_pie said:


> in addition to slowed consumer borrowing, there's vanished borrowing from the energy sector. There's competition from all the upstart online banks that are drawing deposits away from the big 5. Then there's the big boogeyman who's always waiting. Waiting for a plunge in housing prices.


Cdn banks have always been a bellwether of the Cdn economy with a slight outperformance due to the historical oligarchy nature of the banks. That is no longer true with FinTech but I expect the banks to perform approximately in line with the Cdn economy. Reasonable single digit returns long term which ain't bad for a buy and hold investor. I wouldn't overweight them.


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## Eder

I live off my dividends...5% div & 10 PE is in my wheelhouse. My kids can worry about cap gains or total returns on my bank stocks after I kick the bucket.


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## humble_pie

james4beach said:


> So let's all be clear: everyone is speculating on the sector.



nay nay laddie, i am not speculating. I am just sitting here peacefully in my corner with little Jack Horner & my bank stocks, a few of which, once upon a time, belonged to my great-grandfather.

Jack is saying that banks are not just long-term holds, they are entire lifetime holds.

me i've studded up my bank shares with short calls & short puts. The thing is known as a strangle. My bank shares are as studded with currant, date, walnut & cherry strangles as a christmas pudding. In RY i'm short some 74 calls & some 80 calls, plus i'm short 58 puts.

this pudding of options plus dividends is yielding 6-8% in tax-favoured income on a current basis. Current does not include any notional or paper gains in the prices of the shares themselves.

what's not to like? Jack is saying banks have a long way to fall before they start worrying about cutting their dividends, although canada did drift into that territory in 2008/09.

the greatest stress i have these days in bank shares is restraining my fingers from creeping towards the order entry platform. The fingers keep wanting to sell more puts, tch, so i have to keep slapping them back.


----------



## dubmac

humble_pie said:


> nay nay laddie, i am not speculating. I am just sitting here peacefully in my corner with little Jack Horner & my bank stocks, a few of which, once upon a time, belonged to my great-grandfather.
> 
> Jack is saying that banks are not just long-term holds, they are entire lifetime holds.
> 
> me i've studded up my bank shares with short calls & short puts. The thing is known as a strangle. My bank shares are as studded with currant, date, walnut & cherry strangles as a christmas pudding. In RY i'm short some 74 calls & some 80 calls, plus i'm short 58 puts.
> 
> this pudding of options plus dividends is yielding 6-8% in tax-favoured income on a current basis. Current does not include any notional or paper gains in the prices of the shares themselves.
> 
> what's not to like? Jack is saying banks have a long way to fall before they start worrying about cutting their dividends, although canada did drift into that territory in 2008/09.
> 
> the greatest stress i have these days in bank shares is restraining my fingers from creeping towards the order entry platform. The fingers keep wanting to sell more puts, tch, so i have to keep slapping them back.


+1.

At times like these, I like to read a little history - below are a collection that I have at the top of my shopping list for 2016-2017. Bold-faced one's I've started already.

Canadian Stocks

These Canadian companies have been paying dividends for well over 100 years.

Bank of Montreal (BMO) – paid dividends since 1829.
*Bank of Nova Scotia (BNS) – paid dividends since 1832.*
TD (TD) – paid dividends since 1857.
CIBC (CM) – paid dividends since 1868.
*Royal Bank (RY) – paid dividends since 1870.*
Other selected Canadian companies that have paid dividends for decades include:

Enbridge (ENB)
*Fortis (FTS)*
*Bell Canada Enterprises (BCE)*


*PS: Could you ever imagine dripping a stock overt the course of 180 years!


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## fatcat

dubmac said:


> *PS: Could you ever imagine dripping a stock overt the course of 180 years!


just don't ask me to calculate the capital gain when i sold it after 180 years of drips ! :hopelessness:


----------



## humble_pie

fatcat said:


> just don't ask me to calculate the capital gain when i sold it after 180 years of drips ! :hopelessness:



it wasn't 180 years but we have tiny paper notes that list how, in the years right after WW I, the great granpappy regularly used to walk over to the only bank in the neighbourhood. As it happened, this was the royal bank.

he would withdraw a few dollars from his savings account. His wispy scribbles on the notepapers show that he'd then buy "3 shares" of the royal bank of canada or "2 shares" of the bank of montreal. Once, evidently overwhelmed by extravagance, granpappy bought no less than "17 shares of imperial tobacco." 

since he didn't have a broker - granpappy was either too poor or too scottish to have a broker - the bank manager would arrange for the bank's treasury department to purchase the shares for him. In due course, lovely engraved vellum share certificates would arrive by mail.

the practice was a kind of predecessor DRIP, style discount broker, nearly a hundred years ago.


----------



## Pluto

james4beach said:


> Why would you guys add to your bank exposure as the economy slows down? Bank equities have increased tremendously since 2009... if anything this is the time to cash out gains. That kind of performance is not a perpetual thing.
> 
> Once the commodities slowdown goes through the broad economy, other business will slow down and real estate is at great risk. If there's a bear market in housing, all bank stocks will decline.


I sold my bank stock in the fall of 2014. Since that time I get ragged on by goldstone for my "bearish" and "macro" comments. lol. And fatcat has chronically predicted I will end up buying them back at a higher price. lol. Not ready to buy them back yet, but I have to say, I can't tell the future. What I can tell and what I based my decision on was some strange concept of value. Banks looked over valued when I sold. Too, the market in general seemed over valued. Plus the market action looked jaded. So far, so good. It remains to get back in at good or better value, then hope for the best.


----------



## Pluto

Killer Z said:


> James, respectfully, I believe most on this forum purchase the banks as a long term hold. If that is one's position, the strategy is simple: *add to them when the price comes down, and ignore the noise*.
> 
> Obviously there may be more down slide to come, all signs point to the same. However, market timing is not necessary for most investors on this forum. The banks are cheap right now, and the dividends are attractive. The banks may get cheaper and their dividends may get more attractive, but that only matters should one wish to play that game.
> 
> Keep investing simple. Just my $0.02.


I'm not convinced the banks are cheap. Relative to a year ago, the are not bad, but cheap is an overstatement. In 2009 RY yield hit 8%. BMO apparently hit 10%. That's cheap. I'm not claiming they will get that cheap this time, but .... the bank stocks are not going up into new high territory anytime soon, so there is lots of time to see how cheap the get. This isn't market timing. Its about value. 

RY topped out in may of 2007 and then it took until 2013 to break even. I'm not a big fan of being in the red for so long. I can smell better value around the corner.


----------



## fatcat

humble_pie said:


> it wasn't 180 years but we have tiny paper notes that list how, in the years right after WW I, the great granpappy regularly used to walk over to the only bank in the neighbourhood. As it happened, this was the royal bank.
> 
> he would withdraw a few dollars from his savings account. His wispy scribbles on the notepapers show that he'd then buy "3 shares" of the royal bank of canada or "2 shares" of the bank of montreal. Once, evidently overwhelmed by extravagance, granpappy bought no less than "17 shares of imperial tobacco."
> 
> since he didn't have a broker - granpappy was either too poor or too scottish to have a broker - the bank manager would arrange for the bank's treasury department to purchase the shares for him. In due course, lovely engraved vellum share certificates would arrive by mail.
> 
> the practice was a kind of predecessor DRIP, style discount broker, nearly a hundred years ago.


we forget that very ordinary hard working savers were the backbone of the market in those days ... they didn't have supercomputers front-running trades like today ... my grandad was a broker in victoria and told me it was a big day when they got an actual telephone line that connected right to the trading floor of the vancouver stock exchange


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## Pluto

james4beach said:


> Let me get this straight, now that commodity prices are crashing and the global economy is slowing, _you think a new golden era in bank profits is just starting?_
> 
> Here's the time line I see with a link to the chart
> 
> I think we're at the start of a bear market, which means you're buying at the top./QUOTE]
> 
> Nice chart. It could easily go to 20-22.


----------



## Pluto

humble_pie said:


> it wasn't 180 years but we have tiny paper notes that list how, in the years right after WW I, the great granpappy regularly used to walk over to the only bank in the neighbourhood. As it happened, this was the royal bank.
> 
> he would withdraw a few dollars from his savings account. His wispy scribbles on the notepapers show that he'd then buy "3 shares" of the royal bank of canada or "2 shares" of the bank of montreal. Once, evidently overwhelmed by extravagance, granpappy bought no less than "17 shares of imperial tobacco."
> 
> since he didn't have a broker - granpappy was either too poor or too scottish to have a broker - the bank manager would arrange for the bank's treasury department to purchase the shares for him. In due course, lovely engraved vellum share certificates would arrive by mail.
> 
> the practice was a kind of predecessor DRIP, style discount broker, nearly a hundred years ago.


As far as I know you could still buy them through your bank only 35 years ago. Cool story. smart investor too. Imperial tobacco. good one. probably did better than the bank stock.


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## fatcat

Pluto said:


> I sold my bank stock in the fall of 2014. Since that time I get ragged on by goldstone for my "bearish" and "macro" comments. lol. And fatcat has chronically predicted I will end up buying them back at a higher price. lol. Not ready to buy them back yet, but I have to say, I can't tell the future. What I can tell and what I based my decision on was some strange concept of value. Banks looked over valued when I sold. Too, the market in general seemed over valued. Plus the market action looked jaded. So far, so good. It remains to get back in at good or better value, then hope for the best.


i never "chronically" predicted anything

i merely said (once, i think), and say again, that selling with the idea that you can buy equities back at a lower price is more like day-trading than it is investing

and very few people make good money doing it because its hard to do

you may do well on your 2014 bank stock sale but you will undoubtedly get creamed by another trade down the line ... that's all

if merely selling to re-buy at a lower price were so easy we'd all be doing it

it requires making not one but two correct market timing calls, very hard to do


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## james4beach

fatcat said:


> we forget that very ordinary hard working savers were the backbone of the market in those days ... they didn't have supercomputers front-running trades like today ... my grandad was a broker in victoria and told me it was a big day when they got an actual telephone line that connected right to the trading floor of the vancouver stock exchange


fatcat, your grandfather would puke if he saw the stock market of today.

Hard working savers the backbone of the market? Hilarious! Fast forward to today.... the backbone of the market is the central bank's decision month to month of how much $ they pump into the market. If they run QE and ZIRP at full strength, the market goes up. If they keep QE unchanged the market goes sideways. If they withdraw QE the market goes down.

And today's market is entirely driven by the central bank decisions, and the huge institutions and pensions which follow them and trade upon the central bank policies.

So while us fools sit here trying to make sense of say Royal Bank's business, what's _really_ going on is that if the Federal Reserve decides to keep pumping free money into the markets, then RBC profits. If liquidity is yanked, RBC has losses. The same is true for every large commercial bank around the world.


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## Pluto

fatcat said:


> i never "chronically" predicted anything
> 
> i merely said (once, i think), and say again, that selling with the idea that you can buy equities back at a lower price is more like day-trading than it is investing
> 
> and very few people make good money doing it because its hard to do
> 
> you may do well on your 2014 bank stock sale but you will undoubtedly get creamed by another trade down the line ... that's all
> 
> if merely selling to re-buy at a lower price were so easy we'd all be doing it
> 
> it requires making not one but two correct market timing calls, very hard to do


got you all riled up. lol. It isn't market timing. Its about value. buy under valued. then if one sells sell when over valued. People chronically claim it is market timing, when it isn't.


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## treva84

james4beach said:


> fatcat, your grandfather would puke if he saw the stock market of today.
> 
> Hard working savers the backbone of the market? Hilarious! Fast forward to today.... the backbone of the market is the central bank's decision month to month of how much $ they pump into the market. If they run QE and ZIRP at full strength, the market goes up. If they keep QE unchanged the market goes sideways. If they withdraw QE the market goes down.
> 
> And today's market is entirely driven by the central bank decisions, and the huge institutions and pensions which follow them and trade upon the central bank policies.
> 
> So while us fools sit here trying to make sense of say Royal Bank's business, what's _really_ going on is that if the Federal Reserve decides to keep pumping free money into the markets, then RBC profits. If liquidity is yanked, RBC has losses. The same is true for every large commercial bank around the world.


I agree in that we are in uncharted territory. However no one can accurately predict which way things will go in the future - that is pure speculation. 

Many good companies have been profitable for many years, under ever changing economic conditions. I believe Royal Bank is one of those companies, which is why I bought more stock. I believe they will continue to adapt in the future, like they have in the past, to handle whatever the economy throws at them. 

As Ben Graham said, to be an investor you need to be an optimist and believe in a better tomorrow.


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## fatcat

james4beach said:


> fatcat, your grandfather would puke if he saw the stock market of today.
> 
> Hard working savers the backbone of the market? Hilarious! Fast forward to today.... the backbone of the market is the central bank's decision month to month of how much $ they pump into the market. If they run QE and ZIRP at full strength, the market goes up. If they keep QE unchanged the market goes sideways. If they withdraw QE the market goes down.
> 
> And today's market is entirely driven by the central bank decisions, and the huge institutions and pensions which follow them and trade upon the central bank policies.
> 
> So while us fools sit here trying to make sense of say Royal Bank's business, what's _really_ going on is that if the Federal Reserve decides to keep pumping free money into the markets, then RBC profits. If liquidity is yanked, RBC has losses. The same is true for every large commercial bank around the world.


i certainly agree, when every asset class i own goes down 

i see that money isn't moving between classes it's going into cash

it's an expression of fear and since most small investors tend to be buy and holders (not market timers) i suspect we are seeing a market being pushed around by big money


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## fatcat

Pluto said:


> got you all riled up. lol. It isn't market timing. Its about value. buy under valued. then if one sells sell when over valued. People chronically claim it is market timing, when it isn't.


sorry man, if you own a good stock and you sell it with the intent of buying it back you are timing the market, if you weren't timing the market you would merely hold the stock

you are talking about trading not investing which is fine, trading is fine, except of course over time traders do about as good as the market so you might as well just buy and hold and avoid the stress of trading

go here and look at the track record of all the investment gurus: http://www.nickldown.com/BNN001.html

they have about as many winners as losers ... timing the market, finding value, it's all stock picking and in the end it really is about a flip of the coin you get 50% right and 50% wrong


----------



## Pluto

fatcat said:


> sorry man, if you own a good stock and you sell it with the intent of buying it back you are timing the market, if you weren't timing the market you would merely hold the stock
> 
> you are talking about trading not investing which is fine, trading is fine, except of course over time traders do about as good as the market so you might as well just buy and hold and avoid the stress of trading
> 
> go here and look at the track record of all the investment gurus: http://www.nickldown.com/BNN001.html
> 
> they have about as many winners as losers ... timing the market, finding value, it's all stock picking and in the end it really is about a flip of the coin you get 50% right and 50% wrong


I know the track record of all the gurus. So what? That's got nothing to do with me. 
What I do isn't market timing. Its about value. I sold over valued bank stock in the fall of 2014. Basically I sold my risk to someone else. lol. Now I'm waiting for acceptable value to buy bank stock. Waiting for value isn't timing, its just waiting and watching. When it happens, I strike. 

It isn't true that the markets are purely random. Stock markets are essentially tied to earnings, and earnings of cdn bank stocks are not random either. When the price gets to its upper historical range in relation to its earnings, its a bad buy. Holding or selling, or partially selling are the best options at that point. That's what happened to CDN bank stocks in the fall of 2014 - they topped out at the upper of their historical p/e range with not exactly euphoria, but a lot of unrealistic optimism. Now it looks like we are in dubious times, which may turn to pessimism. Wouldn't surprise me if we can pick up CDN banks with an average yield of 6% sometime this year. 

The essential strategy is to decline to buy them when they are at their historical p/e peak. That isn't market timing. Its declining to buy over priced assets with pitiful dividends. 
In Buffett's house they like hamburgers, so when they go on sale, they stock up and put them in the freezer. He isn't timing the hamburger market, he's taking advantage of an opportunity when he see it. Same thing with stocks. You end up with 20 - 30 % more shares just by waiting for a sale. I don't get what part of that is so difficult to understand.


----------



## Moneytoo

Pluto said:


> I sold over valued bank stock in the fall of 2014. Basically I sold my risk to someone else. lol


Yeah - to me lol I bought BNS and TD in October 2014 - and was so happy that I got both "on the dip, in the middle of long-awarded correction!" 

It's OK, no regrets, I'm sure I'll be able to sell both to another noob above my purchase price, some time in the future, when I'll be all-knowing and patient...


----------



## treva84

Pluto said:


> That's what happened to CDN bank stocks in the fall of 2014 - they topped out at the upper of their historical p/e range with not exactly euphoria, but a lot of unrealistic optimism. Now it looks like we are in dubious times, which may turn to pessimism. Wouldn't surprise me if we can pick up CDN banks with an average yield of 6% sometime this year.
> 
> The essential strategy is to decline to buy them when they are at their historical p/e peak. That isn't market timing. Its declining to buy over priced assets with pitiful dividends.


Do you know the P/E / Div Yield you sold them for? Furthermore, do you guys know of any websites where you can look up the historical P/E and yield of any stock at any given time in the past?


----------



## fatcat

Pluto said:


> I know the track record of all the gurus. So what? That's got nothing to do with me.
> What I do isn't market timing. Its about value. I sold over valued bank stock in the fall of 2014. Basically I sold my risk to someone else. lol. Now I'm waiting for acceptable value to buy bank stock. Waiting for value isn't timing, its just waiting and watching. When it happens, I strike.
> 
> It isn't true that the markets are purely random. Stock markets are essentially tied to earnings, and earnings of cdn bank stocks are not random either. When the price gets to its upper historical range in relation to its earnings, its a bad buy. Holding or selling, or partially selling are the best options at that point. That's what happened to CDN bank stocks in the fall of 2014 - they topped out at the upper of their historical p/e range with not exactly euphoria, but a lot of unrealistic optimism. Now it looks like we are in dubious times, which may turn to pessimism. Wouldn't surprise me if we can pick up CDN banks with an average yield of 6% sometime this year.
> 
> The essential strategy is to decline to buy them when they are at their historical p/e peak. That isn't market timing. Its declining to buy over priced assets with pitiful dividends.
> In Buffett's house they like hamburgers, so when they go on sale, they stock up and put them in the freezer. He isn't timing the hamburger market, he's taking advantage of an opportunity when he see it. Same thing with stocks. You end up with 20 - 30 % more shares just by waiting for a sale. I don't get what part of that is so difficult to understand.


i know what value investing is ... 

but in the context of selling a good stock to rebuy it at a better value (shorting it using value as a metric) you really are just day trading ...

if you own a stock that dips in value but you know has a long term value (one of buffets key metrics, buy what you will hold for many years) and you sell with the intention of rebuying you incur both trading costs and significant risk since you must call two points in time correctly (the exit point to sell and the entry point to rebuy) 

i own royal bank and you think bank stocks are overvalued so under your scenario i should sell now and rebuy when (IF) it is a better value

under this scenario there are the problems i have outlined above: cost, exit and entry risk, not to even mention tax consequences

but the bigger problem is that i incur all of these risks for a stock that i have deemed so good that i can hold it for a decade or more (a basic buffet rule)

i have taken on all this risk for a stock that i own and plan to own for many years ... i am effectively getting rid of a good stock merely because it's value has dipped 

this makes zero sense and can only be described as day-trading, not investing

selling a stock that you don't want because it is overvalued is another matter altogether
-------------
after i posted the above, i stumbled on an article at seeking alpha about berkshire talking about the movement of the stock price and why timing is so difficult, an excerpt: 



> A good way to lose money by owning strong and ultimately growing businesses is to jump in and out: "In today, out 6 months from now, 'Oh, I lost money, try again.' That's not investing, that's speculation. It's part of the reason why you hear about those studies where investors' returns average 3% as compared to 8% returns that a simple index fund would have accomplished. It's not the most exciting route, but consistently allocating capital toward profitable businesses and keeping a long-term mindset make it a whole lot easier not to lose.


http://seekingalpha.com/article/3816646-lose-money-owning-berkshire-hathaway


----------



## Pluto

fatcat said:


> i know what value investing is ...
> 
> but in the context of selling a good stock to rebuy it at a better value (shorting it using value as a metric) you really are just day trading ...
> 
> if you own a stock that dips in value but you know has a long term value (one of buffets key metrics, buy what you will hold for many years) and you sell with the intention of rebuying you incur both trading costs and significant risk since you must call two points in time correctly (the exit point to sell and the entry point to rebuy)
> 
> i own royal bank and you think bank stocks are overvalued so under your scenario i should sell now and rebuy when (IF) it is a better value
> 
> under this scenario there are the problems i have outlined above: cost, exit and entry risk, not to even mention tax consequences
> 
> but the bigger problem is that i incur all of these risks for a stock that i have deemed so good that i can hold it for a decade or more (a basic buffet rule)
> 
> i have taken on all this risk for a stock that i own and plan to own for many years ... i am effectively getting rid of a good stock merely because it's value has dipped
> 
> this makes zero sense and can only be described as day-trading, not investing
> 
> selling a stock that you don't want because it is overvalued is another matter altogether
> -------------
> after i posted the above, i stumbled on an article at seeking alpha about berkshire talking about the movement of the stock price and why timing is so difficult, an excerpt:
> 
> 
> 
> http://seekingalpha.com/article/3816646-lose-money-owning-berkshire-hathaway


Day trading? nope. never day traded in my life. 
I do hold for many years. 
I don't think RY is over valued presently and I never advised you or anyone to sell it. I think I wrote earlier in this thread that its p/e is below its historical median, so it is not that bad of a buy, even though I think it is early. Also what I said was that I sold my bank stock in the fall of 2014 at much higher prices and when the p/e's were bumping up against their historical highs. I didn't advise anyone to sell at that time, or this time. I suspect it will go down more this year, however. And I do advise buying it when it is on sale. 
I'm not timing, so I don't know what relevance the article is. In this case I am paying attention to valuations on a p/e basis and using that in my decision making. 

You completely miss the point by equating buying undervalued stocks with market timing. Those two things are not equal. I think you also use the terms "value" and "price" as if they are equal. They are not the same thing. For instance you wrote "dip in value" when I would say dip in price, giving slightly better value. All other variables being equal, when RY drops in price, it is better value from the point of view of a buyer. 

Anyway fatcat, I know it riles you. lol. You will never convince me that buying over valued stock and then sitting in the red for years is a good idea.


----------



## daylatedollarshort

In choosing a bank, the way I see it is: TD you're buying domestic customer service (I'd worry about their U.S. adventures), BNS you're buying international exposure, particularly Latin America and Asia, RY you're buying a top-tier investment bank and strong capital markets operations which means that earnings will fluctuate substantially, BMO you're buying a high dividend, muted growth and consistent earnings drawn from the domestic market.... CIBC you're throwing your money away [/QUOTE]


In general, is this fairly constant or do the big 5 tend to change their "identity" as defined on this list for any given year?


----------



## Ethan

treva84 said:


> Do you know the P/E / Div Yield you sold them for? Furthermore, do you guys know of any websites where you can look up the historical P/E and yield of any stock at any given time in the past?


I use www.fastgraphs.net. It's a subscription service ($10 USD/month) but it works well for me.


----------



## treva84

Ethan said:


> I use www.fastgraphs.net. It's a subscription service ($10 USD/month) but it works well for me.


I signed up for this website, it's awesome. Very helpful. Makes me realize some of my purchases this time last year (i.e. ACO.X) were at peak over-valuation... :stupid:


----------



## lost in space

fatcat said:


> i know what value investing is ...
> but in the context of selling a good stock to rebuy it at a better value (shorting it using value as a metric) you really are just day trading ...
> if you own a stock that dips in value but you know has a long term value (one of buffets key metrics, buy what you will hold for many years) and you sell with the intention of rebuying you incur both trading costs and significant risk since you must call two points in time correctly (the exit point to sell and the entry point to rebuy)


-and-



Moneytoo said:


> Yeah - to me lol I bought BNS and TD in October 2014 - and was so happy that I got both "on the dip, in the middle of long-awarded correction!"
> It's OK, no regrets, I'm sure I'll be able to sell both to another noob above my purchase price, some time in the future, when I'll be all-knowing and patient...


I too bought several banks back in 2012 and sold them in January 2014 (and taking the tax hit) but with the advantage of hindsight I see two things. One I sold way way too early, it wasn’t till around October that the stocks peaked. Secondly all the bank are back at the same price they when I sold them. Now I noticed this the other day. By the way, Scotiabank economists had this to say the other day about Canadian banks: “In our view this is the best buying opportunity in the space since February 2009 and we would be aggressively buying the group. We expect a significant rally in bank stocks as the market gets greater clarity on the Canadian economy as it adjust once again to the commodity cycle.” TD has has held its own but the rest of the bunch are way way down. It’s a great buying opportunity, more importantly if they never recover I’m quite happy to own them forever. BUTif the market offers decent capital gains than I might consider it.

So here’s the 64,000 dollar question. When do I take profits? Don't want to leave a lot of money on the table again.


----------



## humble_pie

spouses may come & go
even children grow up & leave the nest
but chartered banks are forever
fool around in the options if u want to fool around


----------



## The_Tosser

lost in space said:


> So here’s the 64,000 dollar question. When do I take profits? Don't want to leave a lot of money on the table again.


And it's precisely this fear that keeps people long stock forever, even when they're darn sure the upside potential is no-where near the downside risk.

You didn't miss a thing by dumping 'early'. Most people here are far too polarized in their thinking. You think that you missed out because you sold 'early'. This isn't true at all unless you chose to never buy any dip since, and then once profitable, and maybe even catching a divvy or two didn't once again play defensive and take profits or stop out for gains of some sort. You may have sat on your *** doing nothing the entire time since, so if you're looking for an 'answer' of any type it might just be, sitting on your *** doesn't work well for anyone.

The other side of the table just lost in capital gains what they made in dividends anyway, to the bottom of the recent move from your sell point in 2014. It's not like they've made anything either. They just sat on a lot of risk for no rewards. Perfect timing it's a wash, and any subsequent trading you would have done had the potential for gains on top so no perfect timing was needed. After all you had cash available to do so and to use any risk model your position as played would shine like the sun.

This isn't hind-sight either. This is exactly how it works, especially with 'sane' stocks like canadian banks, not so much with 'insane' runners that are simply all over the place.

There are any number of things semi-passive investors can do to mitigate your expressed fear. Buy and hold is no panacea. Its just easier to employ because it takes zero effort or thought and one will justify any stupid reasoning for it.  I don't see too many instances in life where blue collar gets over paid to be lazy. Sure it happens but on the whole those that work at something should rightly receive greater rewards. 

You're better off for using your head in any event. It will serve you well in the future. You're not Lost in Space  although what better place to be lost in anyway?


----------



## Moneytoo

The_Tosser said:


> And it's precisely this fear that keeps people long stock forever, even when they're darn sure the upside potential is no-where near the downside risk.
> 
> You didn't miss a thing by dumping 'early'. Most people here are far too polarized in their thinking.


Not only here  Fresh article from the globe investor:



> “My findings show that two-thirds of the time investors will bank their profits when they have made up to 20 per cent,” Lee Freeman-Shor, a portfolio manager at London-based Old Mutual Global Investors, wrote in a recent blog post.
> 
> “*While it may feel good, snatching at profits is a character trait (a habit) of a loser*. In fact, I discovered that 61 per cent of investments that were sold for a profit of less than 20 per cent kept going up. Had the investor stayed invested, they would have made more money. Worse still, big winners were to be found among those [stocks that were sold].”


Selling too early: One of the most frequent investing mistakes

(Personally, I regret selling Starbucks a year ago - and not selling Potash and a few others... and keep holding most of the losers lol)


----------



## The_Tosser

Moneytoo said:


> Not only here  Fresh article from the globe investor:
> 
> 
> 
> Selling too early: One of the most frequent investing mistakes
> 
> (Personally, I regret selling Starbucks a year ago - and not selling Potash and a few others... and keep holding most of the losers lol)


As an avid reader i hate to tell people to stop reading stuff, but this is the garbage that fills peoples minds and it does nothing but confuse them. You really need to stop reading mindless dribble from people like these clowns that are not active in the market. They don't know **** yet people hang on every word like they're giving you some value. You mentioned elsewhere where things get confusing for you. I know. It's because you read complete **** like the links given, all the time. I would get f**ked up reading it too, lol which is why i don't. It's lethal. :cower: Part of 'making it' is realizing you're your own person making your own decisions and not being sidelined by article writers or doomers with 'sage' advice. I don't know T-Snooze and have never met him, but at least that guy is real and lays his appendage on the line every day. Anyone not willing to do that is not worth your time in considering what they have to say. That is your litmus test. Go get tasty  Ouch-potatoes are not even part of this equation, of course.

Why regret stuff? You can't go back, there is no un-do button. Move on. 

You don't drive the car looking into the rear view mirror and you're not sitting in the passenger seat when it's your own car. You're at the wheel. Drive! :rugby:

lol, have a good day.


----------



## godblsmnymkr

lost in space said:


> I too bought several banks back in 2012 and sold them in January 2014 (and taking the tax hit) but with the advantage of hindsight I see two things. One I sold way way too early, it wasn’t till around October that the stocks peaked. Secondly all the bank are back at the same price they when I sold them. Now I noticed this the other day. By the way, Scotiabank economists had this to say the other day about Canadian banks: “In our view this is the best buying opportunity in the space since February 2009 and we would be aggressively buying the group. We expect a significant rally in bank stocks as the market gets greater clarity on the Canadian economy as it adjust once again to the commodity cycle.” TD has has held its own but the rest of the bunch are way way down. It’s a great buying opportunity, more importantly if they never recover I’m quite happy to own them forever. BUTif the market offers decent capital gains than I might consider it.
> 
> So here’s the 64,000 dollar question. When do I take profits? Don't want to leave a lot of money on the table again.


i would really take a look at FAST graphs mentioned earlier. it saves me so much time i could not even begin to estimate it. the most valuable thing it does imo, is it shows you the current price of the stock in relation to the company's earnings growth rate. it shows you very quickly if something is over/under valued. if a stocks price is above the growth line I'm generally not looking to buy as I am over paying. if i already own the stock and it starts to get well over its growth rate i am probably taking a closer look to trim some and take some profits. 
imo its important to trim some of your stocks if you feel like they are getting over valued. does not mean you have to sell it all, keep your core position, but if it is up against all time highs its usually time to trim some. especially in this low growth market. it could be years before the stock reaches those highs again.
I have done this with O and AT&T lately and recycled the funds to look for better value elsewhere.


----------



## Pluto

On the $64000 question. 

1. There is nothing wrong with buying and holding forever especially if one does not want to devote time to study how to buy low and sell high. However, if one enjoys this type of challenge and has the time to study the markets: -

2. You have to have your target companies that you want to own. In this case, RY. With RY you need to know 
A) Value. What is value in general? Price is what you pay, value is what you get. With RY there are a couple of easy ways to approximate value. One is on a p/e basis and the other is on a yield basis. What I did was look at its p/e at its 2007 peak and at its 2009 low. There were about 14.5 and 7.4 respectively. When the P/e was 14+ the price was over 60. When the p/e was 7.4 the price was around 25. so whats better value, paying 14 for one dollar of earnings, or paying 7.5 for a dollar of earnings? Obviously the less I pay for a dollar of earnings, the better the value. So I buy as close to its historical low p/e at possible. Now the $64000 question:- sell when the stock is bumping up against its historical high p/e. Same thing with yield. Calculate its historical high yield in 2009. Calculate its historical low yield near a market peak, either 2007 peak, or 2014. Then you have a realistic range of possibilities. Buy when the yield is high, sell when the yield is low. So its median p/e is around 11. do not buy if p/e is above 11. When you buy, buy when the market is taking a pounding. When it hits p/e 13 - 14 sell into strength. That means sell into a market rally. 
B) general market conditions and market action. Economies and markets are cyclical. you need to know where you are in the cycal. Right now, in my opinion, a mature Bull is ending. Lots of time, I suspect, to buy RY at a good price. There is no need to rush to buy when the US market is over valued still. Prices need to come down to get into the good value zone. When that happens, CDN stocks will likely get dragged down too. 

In essence this is part of Buffett Munger approach: When other are greedy, sell. When other are fearful, buy. RY got to a low P/E of 7.4 during a time of fear. RY got to a p/e of 14+ during a time of over optimism, complacency, don't worry be happy. Time to let the overly optimistic buy your overvalued shares.


----------



## Eder

48k tax free dividends is why it's best I don't flip stocks like RY. If I am guaranteed that I'd I sell my RY Monday at $70 and I can buy it back in July at $60 I would, but only fools would believe this trade is positive expected value.


----------



## lost in space

godblsmnymkr said:


> i would really take a look at FAST graphs mentioned earlier. it saves me so much time i could not even begin to estimate it. the most valuable thing it does imo, is it shows you the current price of the stock in relation to the company's earnings growth rate. it shows you very quickly if something is over/under valued. if a stocks price is above the growth line I'm generally not looking to buy as I am over paying. if i already own the stock and it starts to get well over its growth rate i am probably taking a closer look to trim some and take some profits.
> imo its important to trim some of your stocks if you feel like they are getting over valued. does not mean you have to sell it all, keep your core position, but if it is up against all time highs its usually time to trim some. especially in this low growth market. it could be years before the stock reaches those highs again.
> I have done this with O and AT&T lately and recycled the funds to look for better value elsewhere.


Thanks, I remember looking at them a few years ago but I don't remember why I didn't sign up. I think I'm going to subscribe as I need a better way of researching the stocks I'm interested in. Did you go with the basic or premium version?

Edit, been looking at the videos and this is a tool I could use


----------



## treva84

lost in space said:


> Thanks, I remember looking at them a few years ago but I don't remember why I didn't sign up. I think I'm going to subscribe as I need a better way of researching the stocks I'm interested in. Did you go with the basic or premium version?
> 
> Edit, been looking at the videos and this is a tool I could use


I've used Basic, which more than meets my needs. I actually signed up just for the 14 day free trial and I'll soon be cancelling my account (no more money to buy stocks!).

What about selling, some of you may say? Well, I don't plan on selling anytime soon.


----------



## Pluto

godblsmnymkr said:


> i would really take a look at FAST graphs mentioned earlier. it saves me so much time i could not even begin to estimate it. the most valuable thing it does imo, is it shows you the current price of the stock in relation to the company's earnings growth rate. it shows you very quickly if something is over/under valued. if a stocks price is above the growth line I'm generally not looking to buy as I am over paying. if i already own the stock and it starts to get well over its growth rate i am probably taking a closer look to trim some and take some profits.
> imo its important to trim some of your stocks if you feel like they are getting over valued. does not mean you have to sell it all, keep your core position, but if it is up against all time highs its usually time to trim some. especially in this low growth market. it could be years before the stock reaches those highs again.
> I have done this with O and AT&T lately and recycled the funds to look for better value elsewhere.


That sounds like a good tool: Fast Graphs. Thanks for sharing. Do they include CDN stocks?


----------



## godblsmnymkr

Pluto said:


> That sounds like a good tool: Fast Graphs. Thanks for sharing. Do they include CDN stocks?


ya


----------



## lost in space

Pluto said:


> On the $64000 question.
> 
> 1. There is nothing wrong with buying and holding forever especially if one does not want to devote time to study how to buy low and sell high. However, if one enjoys this type of challenge and has the time to study the markets: -
> 
> 2. You have to have your target companies that you want to own. In this case, RY. With RY you need to know
> A) Value. What is value in general? Price is what you pay, value is what you get. With RY there are a couple of easy ways to approximate value. One is on a p/e basis and the other is on a yield basis. What I did was look at its p/e at its 2007 peak and at its 2009 low. There were about 14.5 and 7.4 respectively. When the P/e was 14+ the price was over 60. When the p/e was 7.4 the price was around 25. so whats better value, paying 14 for one dollar of earnings, or paying 7.5 for a dollar of earnings? Obviously the less I pay for a dollar of earnings, the better the value. So I buy as close to its historical low p/e at possible. Now the $64000 question:- sell when the stock is bumping up against its historical high p/e. Same thing with yield. Calculate its historical high yield in 2009. Calculate its historical low yield near a market peak, either 2007 peak, or 2014. Then you have a realistic range of possibilities. Buy when the yield is high, sell when the yield is low. So its median p/e is around 11. do not buy if p/e is above 11. When you buy, buy when the market is taking a pounding. When it hits p/e 13 - 14 sell into strength. That means sell into a market rally.
> B) general market conditions and market action. Economies and markets are cyclical. you need to know where you are in the cycal. Right now, in my opinion, a mature Bull is ending. Lots of time, I suspect, to buy RY at a good price. There is no need to rush to buy when the US market is over valued still. Prices need to come down to get into the good value zone. When that happens, CDN stocks will likely get dragged down too.
> 
> In essence this is part of Buffett Munger approach: When other are greedy, sell. When other are fearful, buy. RY got to a low P/E of 7.4 during a time of fear. RY got to a p/e of 14+ during a time of over optimism, complacency, don't worry be happy. Time to let the overly optimistic buy your overvalued shares.



I LOVE FASTGRAPHS - Agree with your thinking totally and it's how I tend to invest, find quality companies on sale. The problem I've been having is finding that information and that's where fastgraphs come in. Everything is there. If I had Fastgraph I would have never gotten into Potash but I digress. If I have one complaint it's the price bar on the left goes from zero to 150 so a large price move like 10 dollars barely shows up. Do try out the 14 day free trail!

RY is currently trading at a PE if 10 which is on the low side The yield is 4.1% which is also on the higher side


----------



## zylon

*Lifted from "ModelPrice Guy" on Facebook*





image upload without registration


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## treva84

zylon said:


> image upload without registration


Never heard of EBV; initially I thought it was a technical analysis measure but it isn't. I'll have to learn more. Thanks for sharing.


----------



## zylon

treva84 said:


> Never heard of EBV; initially I thought it was a technical analysis measure but it isn't. I'll have to learn more. Thanks for sharing.


I've gotten in the habit of checking ModelPrice chart/table before buying anything.

The EBV lines are quite helpful - a few things I've picked up hanging around MP site:

if EBV lines are sloping downward on any company, this means analysts are either forecasting losses or their distributions (payout) is greater than any earnings the company is forecasting over the next year or so.
price movement between any two EBV lines doesn't carry any great significance.
a positive transit (up) or a negative transit (down) through a line is more important than movement between two lines.
EBV coloured lines are more powerful than grey lines.
The Model Price remains a mystery to me, so I mostly ignore it.
At the present time, MP for RY is ~$76 which isn't too far off of Morning Star's "fair value" of $81.


----------



## pastorash

Picked up 18 more shares at $66.67 of RY this morning on weakness, my dividend rate is now at 4.5% overall for all my RY, which suits me fine. I'll handle the temporary weakness in price here as it's a long term buy.


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## james4beach

The last two days have been very calm in the stock market. Today was a flat day on the TSX, so with the absence of market noise I'm going to illustrate how dividends are *not free money*. They directly come out of equity value.

Yesterday's RY close = 84.50
Today's RY open = 83.66
Today's RY dividend = 0.83

The equity value "lost" was 84.50 - 83.66 = 0.84 per share.
The cash dividend "gained" = 0.83 per share.
Net gain for a shareholder = -$0.01 = nil

Dividends directly come out of equity/capital value. True, a solid dividend history is generally an indicator that a company has good cashflow and good health. But the dividend is not free money. It directly subtracts from capital gains, and in terms of total return it is a nil operation.


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## mordko

When people start using certain stocks as if they were bonds, these stocks will start behaving like bonds. And interest rates won't stay low forever.


----------



## Mortgage u/w

james4beach said:


> The last two days have been very calm in the stock market. Today was a flat day on the TSX, so with the absence of market noise I'm going to illustrate how dividends are *not free money*. They directly come out of equity value.
> 
> Yesterday's RY close = 84.50
> Today's RY open = 83.66
> Today's RY dividend = 0.83
> 
> The equity value "lost" was 84.50 - 83.66 = 0.84 per share.
> The cash dividend "gained" = 0.83 per share.
> Net gain for a shareholder = -$0.01 = nil
> 
> Dividends directly come out of equity/capital value. True, a solid dividend history is generally an indicator that a company has good cashflow and good health. But the dividend is not free money. It directly subtracts from capital gains, and in terms of total return it is a nil operation.


Then isn't it free money regardless? Just as the equity gain is "free money" for the company, they simply pass it on to you?


----------



## Pluto

james4beach said:


> The last two days have been very calm in the stock market. Today was a flat day on the TSX, so with the absence of market noise I'm going to illustrate how dividends are *not free money*. They directly come out of equity value.
> 
> Yesterday's RY close = 84.50
> Today's RY open = 83.66
> Today's RY dividend = 0.83
> 
> The equity value "lost" was 84.50 - 83.66 = 0.84 per share.
> The cash dividend "gained" = 0.83 per share.
> Net gain for a shareholder = -$0.01 = nil
> 
> Dividends directly come out of equity/capital value. True, a solid dividend history is generally an indicator that a company has good cashflow and good health. But the dividend is not free money. It directly subtracts from capital gains, and in terms of total return it is a nil operation.


I don't know anyone who says it is free money. Ultimately it comes from earnings. 
There a re lots of different strategies for investing and some people just like companies that spit out cash regularity. I think that younger people can benefit from faster growing non- dividend paying stocks. But lots of older people prefer to avoid all the drama of so called growth stocks by having a selection of companies with tons of assets, manageable debt, and pay a dividend. 

Some companies that don't pay a dividend or not much of one, end up with tons of cash. AAPL for instance. Your theory is that cash gets reflected in the stock price. My theory is not necessarily. And what if one needs the money before the cash is reflected in the stock price? They end up selling an undervalued stock. With dividend payers, it doesn't matter if the stock is undervalued or over valued, as they regularly distribute some earnings.


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## humble_pie

james4beach said:


> Yesterday's RY close = 84.50
> Today's RY open = 83.66
> Today's RY dividend = 0.83



but u were posting this at 5:43 am, almost 4 hours before RY opened in toronto, so how could you have determined an opening price.

i believe RY opened in toronto this morning at 83.77 in a generally down-on-the-day market, does that not put the kibosh to your theory?

.


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## mordko

It's not a theory. It's a fact, studied and empirically proven. If dividends were net gain then everyone would be buying just in time to get them and selling right after and making themselves crazy rich in the process.


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## james4beach

Answering humble's question, the data I listed was for Friday to Monday. The ex dividend was Monday, and overall the market was unchanged Friday-to-Monday (including futures and broad TSX) which is why it was ideal conditions under which to look at the dividend effect.

Most days, there is some market movement and volatility which clouds this effect with additional noise. But if you look at a stock on the ex dividend day, on a day when the stock hasn't moved at all and the broad market is unchanged, you can get a clear view -- that's why I showed this one


----------



## doctrine

Stock price is all perception. The stock fell $0.84 because that is what thousands of investors decided was fair market value. There is a small degree of arbitrage occurring as well. The effect usually disappears after a few days as the dividend fades and investors discount future dividends and earnings less. 

Imagine if RY held back all of its dividends? The stock price of RY would not at all necessarily increase away by $0.84 a quarter more than before, because no one knows whether they can retain the same return on capital for new retained earnings as they do for existing shareholder equity. In fact, the overwhelming evidence suggests that few companies can this in the long run and if you take the chance, you're gambling more than investing. If RY decided to hold back their dividends, the stock price would likely collapse by 50-75%. Hardly the desired effect of retaining the dividend to convert it to capital gains.


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## Argonaut

Over a long enough time period, reinvested dividends start to become virtually all of the total gains in the stock market. Ignore the noise of anti-dividend cultists and remember compound interest.


----------



## mordko

Nobody is "anti-dividend". I am anti-overvalued stocks. If high dividends indicates value, as it often does, then great. Right now a lot of high dividend stocks appear dodgy.


----------



## atrp2biz

mordko said:


> Nobody is "anti-dividend".


Ahem...


----------



## james4beach

Argonaut said:


> Over a long enough time period, reinvested dividends start to become virtually all of the total gains in the stock market. Ignore the noise of anti-dividend cultists and remember compound interest.


Argo, re-investing a dividend is a "no-op" ... it is a null operation. The cash comes out of equity (where do you think the cash comes from?) and then you put it back into equity. You have not lost or gained anything as a result. Yet there are people around here who go looking for high dividend stocks, only to reinvest those dividends. _There is no advantage to this._

Say you have two identical companies, A and B, with the only difference being that A pays a much bigger dividend than B. The total return will be identical (yes even reinvesting the dividends). Why? Because dividends are not free money; they are just a cash transfer.

You might want to read: http://www.diyinvesting.org/concepts/dividends-free-money

I like dividends just fine. They are indeed a good cashflow "test" that feeble companies can't pass(*) -- that's great. What I am opposed to is a misunderstanding of dividends that drives investment behaviour, such as seeking high dividend paying stocks with the (mistaken) belief that the dividends are enhancing the returns, or that they are akin to bond interest.


_(*) footnote: the US banks before the financial crisis were very strong dividend payers, and many people mistook this for evidence that they were solid, well managed companies_


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## Argonaut

You can spout your theory but you fail to understand the reality. Stocks do not trade based on anti-dividend theory, they trade on the market. The market is full of investors who value a reliable income stream. The act of paying a dividend also gives financial prudence to the company paying the dividend. It is furthermore a barometer of health for the company. If they can no longer support the dividend by earnings or cash flow, investors could and likely should sell the stock.

I myself, don't necessarily invest a dividend back into that same company. Though it can be advantageous to do so via DRIP programs. I prefer to take aggregate dividends and buy more stock where I want to, but the important thing is to reinvest them during your accumulation phase no matter how you do it.

Read this with quotes from lots of sources including the patron saint of indexing: https://www.thebalance.com/the-importance-of-dividends-416840


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## james4beach

I agree that market participants _currently_ place a valuation premium on steady dividend payers, and I did say above that it can be a barometer of health. I'm just saying that the dividend itself does not create extra return.

http://canadiancouchpotato.com/2011/01/18/debunking-dividend-myths-part-1/

This series of articles is good to read. I think it's important that dividend-focused investors understand all aspects of dividends.


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## james4beach

From Canadian Couch Potato's article,



> What many investors don’t grasp is the direct relationship between share prices and cash dividends. If a company’s stock is trading at $20 and it pays a $1 dividend, its share price (in theory, anyway) should fall to $19 on the ex-dividend date. This price drop will not be penny for penny, and it may even be washed out by the normal fluctuations in the daily markets. But there is always a trade-off. After all, when a company that pays out, say, $10 million in dividends, it must be worth $10 million less. The failure to understand this point is the reason so many investors think of dividends as “free money.”
> 
> In 1961, Merton Miller and Frank Modigliani published a landmark paper that became the basis for what is now known as the dividend irrelevance theory. They argued that whether or not a company pays dividends should not matter to shareholders, because it does not affect their overall returns. Dividend policy simply determines whether investors end up with a share valued at $20, or a share worth $19 plus $1 in cash.
> 
> Not everyone accepts the Miller-Modigliani model. Two other economists, Myron Gordon and John Lintner published a counter argument that has come to be called the bird-in-the-hand theory. Their idea was that shareholders cannot be sure that a company will spend its capital wisely, so a dollar paid in dividends is preferable to one kept as retained earnings. This may be true, but investors who advocate DRIP programs cannot logically subscribe to this theory: if they truly believed it, they would not reinvest their cash dividends in new shares.


and



> Why do shareholders believe so strongly that a $1 dividend is preferable to a $1 capital gain? Meir Statman looked at this question in a 1984 article called Explaining Investor Preference for Cash Dividends, coauthored by Hersh Sheffrin. He also reviews the idea in his new book, What Investors Really Want, pointing out that receiving $1,000 in dividends is no different from selling $1,000 worth of stock to create a “homemade dividend.”
> 
> *Even when this idea is explained to people, most refuse to accept it. Statman suggests that it comes down to a cognitive bias called mental accounting. Investors categorize $1,000 in dividends as income that they will happily spend, but the idea of selling $1,000 worth of stock is “dipping into capital,” which causes them great anxiety. This idea is deeply ingrained in many investors, but it is an illusion, because a company that pays a dividend to shareholders is depleting its own capital*.


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## wraphter

> pointing out that receiving $1,000 in dividends is no different from selling $1,000 worth of stock to create a “homemade dividend.”


A "homemade dividend" is difficult to create because the volatility of the share price is higher than the volatility of the dividend. 
When one attempts to harvest shares to create a synthetic dividend frequently the share price will be low and this will be detrimental to value of the shares that one holds.It becomes a timing issue and that creates another thing to worry about. You also have to pay a commission. 

The taxes may be lower on the dividend as well.


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## mordko

^thats true but there are other ways. When time comes to draw, you probably wouldn't be selling shares monthly one by one. You should be converting shares into GICs or bonds a few years in advance and generating a steady income stream, far more reliable than either dividends or capital.


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## Eder

Well Canadian Utilities has paid & raised their dividend 44 years in a row, so since I'm living off my income stream I should sell & buy GIC's?? Should I live in fear the share price may plummet 30% for a year or two while still raising their dividend?

Theory is great till real life hits.


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## mordko

^ I think what you are doing is ok as long as you appreciate the risk of having all your eggs within a few Canadian industries and have a large safety factor in case these industries/companies are hit.


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## Pluto

mordko said:


> When people start using certain stocks as if they were bonds, these stocks will start behaving like bonds. And interest rates won't stay low forever.


This could only be true if the earnings of the company was static - no change up or down.


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## Pluto

james4beach said:


> Argo, re-investing a dividend is a "no-op" ... it is a null operation. The cash comes out of equity (where do you think the cash comes from?) and then you put it back into equity. You have not lost or gained anything as a result. Yet there are people around here who go looking for high dividend stocks, only to reinvest those dividends. _There is no advantage to this._
> 
> Say you have two identical companies, A and B, with the only difference being that A pays a much bigger dividend than B. The total return will be identical (yes even reinvesting the dividends). Why? Because dividends are not free money; they are just a cash transfer.
> 
> You might want to read: http://www.diyinvesting.org/concepts/dividends-free-money
> 
> I like dividends just fine. They are indeed a good cashflow "test" that feeble companies can't pass(*) -- that's great. What I am opposed to is a misunderstanding of dividends that drives investment behaviour, such as seeking high dividend paying stocks with the (mistaken) belief that the dividends are enhancing the returns, or that they are akin to bond interest.
> 
> 
> _(*) footnote: the US banks before the financial crisis were very strong dividend payers, and many people mistook this for evidence that they were solid, well managed companies_


To quote your cited article, "Most companies are valued based upon how much money they will earn in the future, and not how much they have currently." 
Ultimately the price of a stock is a function of earnings and earnings growth, or lack of growth, as the case may be. I doubt that each time a dividend is paid the market drops by the exact amount of the dividend. If one valued the company in that instant, the value could drop, for that instant. But the financial affairs of a company is a movie, not just one snapshot. 

I think that we need to make a distinction between price and value to advance this discussion. Your theory that the stock price will drop by the amount of the dividend assumes the markets are efficient, and so, there is never any difference between price and value. I'm not convinced that the markets are, in the short term, as efficient as is assumed. 

So if you were to argue that in the moment that the dividend is paid, the *value* went down by the amount of the dividend, I could agree, but only for that instant. In the moments that follow, the cash register is still ringing. In the days that follow, the cash register is ringing. And if there is more cash coming in this year than last year, and that goes on year after year, the value will go up, and the stock price will go up. In other words, the life of the company is a move, not just a single frame of the movie. 

Some people, in their judgment, want a) to buy shares where the earnings go up, in general, year after year and b) pay out some of the earnings in cash. the fact that some people choose to buy more stock with the dividends is testimony to their belief that earnings will continue to grow.


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## Pluto

Eder said:


> Well Canadian Utilities has paid & raised their dividend 44 years in a row, so since I'm living off my income stream I should sell & buy GIC's?? Should I live in fear the share price may plummet 30% for a year or two while still raising their dividend?
> 
> Theory is great till real life hits.


I agree. there is a void between his theory and praxis. Obviously something is awry with the theory.


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## james4beach

wraphter said:


> A "homemade dividend" is difficult to create because the volatility of the share price is higher than the volatility of the dividend.
> When one attempts to harvest shares to create a synthetic dividend frequently the share price will be low and *this will be detrimental to value of the shares that one holds*.It becomes a timing issue and that creates another thing to worry about.


The exact same thing occurs with a dividend. When a dividend is paid out during depressed equity prices, you directly reduce the equity value at the "worst possible time". It impedes growth/total return in the same way. Every dividend payout reduces the equity value. A dividend at low share prices is just as detrimental as selling off shares at low share prices.

Yes it is a timing issue, but it's the _same_ timing issue on both share sell-off and dividends.

You are suggesting in your text that the dividend is not detrimental to the value of your shares. That's another illustration of the underlying false understanding that dividends are somehow free money. _They come out of equity._ Where do you think the cash comes from?


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## Argonaut

James, you keep ignoring the main fact about dividends, which is all that really matters: Reinvested dividends account for most of stock market returns in the long run. You can do it with individual companies, or with an index. The point is, it takes advantage of the magic of compounding on a personal level.


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## atrp2biz

Argo, re-investing dividends is nothing more than moving money from one pocket to another and back to the original pocket. Let's assume a company has a DRIP program to which all shareholders subscribe to. Following the dividend payment and reinvestment, there is no net change in cash and perceived company value. There are simply more shares outstanding. The share price MUST be lower equal to the dividend if the perceived company value is unchanged.

Reinvested dividends accounting for most of the market's long term gain is illusion. If for instance a company were to payout a dividend of its entire market cap and everyone DRIPed, is the entire holding now considered to be reinvested dividends? Also, what one doesn't know is the 'compounded' value of a company if dividends were not paid.


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## wraphter

james4beach said:


> The exact same thing occurs with a dividend. When a dividend is paid out during depressed equity prices, you directly reduce the equity value at the "worst possible time". It impedes growth/total return in the same way. Every dividend payout reduces the equity value. A dividend at low share prices is just as detrimental as selling off shares at low share prices.
> 
> Yes it is a timing issue, but it's the _same_ timing issue on both share sell-off and dividends.
> 
> You are suggesting in your text that the dividend is not detrimental to the value of your shares. That's another illustration of the underlying false understanding that dividends are somehow free money. _They come out of equity._ Where do you think the cash comes from?


It is not just about the dollar amount that is withdrawn. One could withdraw the same amount of dollars as a dividend or as shares.

But if you sell a certain amount of shares when the share price is below your cost price, then you will have less shares then you started out with,
and it will that much more difficult to get back to where you started--the price per share multiplied by the number of shares.

You are impairing your capacity to grow.


Also you have to make decisions about when to sell which is difficult.With dividends you do not have to make those decisions.


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## Argonaut

atrp2biz said:


> Argo, re-investing dividends is nothing more than moving money from one pocket to another and back to the original pocket. Let's assume a company has a DRIP program to which all shareholders subscribe to. Following the dividend payment and reinvestment, there is no net change in cash and perceived company value. There are simply more shares outstanding. The share price MUST be lower equal to the dividend if the perceived company value is unchanged.
> 
> Reinvested dividends accounting for most of the market's long term gain is illusion. If for instance a company were to payout a dividend of its entire market cap and everyone DRIPed, is the entire holding now considered to be reinvested dividends? Also, what one doesn't know is the 'compounded' value of a company if dividends were not paid.


It's not an illusion, it's just the way it is. Theoretically, a dividend should have the exact same effect as the company repurchasing shares. But paying dividends is just way better for shareholder value. You guys are looking at it from the point of view of the company when you should look at it from the point of view of the investor. The investor doesn't give a crap if they own ever-so-slightly more of the company. But they do care about money in the bank, which they can use to invest further or rely on for an income stream. You can't fake cash. Dividend payers beat non-dividend payers in all historical return calculations.


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## atrp2biz

Argonaut said:


> Dividend payers beat non-dividend payers in all historical return calculations.


I don't have data to confirm or refute your assessment, but there's a difference between causation and correlation. Good companies have cash flow that enables them to pay dividends. Paying dividends does not make a company good.


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## wraphter

^

Research supports dividend payers over non.



> Dividend-paying stocks actually have delivered better long-term total return performance than non-dividend payers by a score of 10.4% per annum to 8.5% per annum from 1927-2014, according to data compiled by Professors Fama & French.
> 
> Dividend-paying stocks have enjoyed lower volatility as the standard deviation measure from 1927-2014 equals 18.3%, compared to 30.1% for non-dividend payers.


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## atrp2biz

My point is it doesn't matter what the data says because of my causation argument.


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## doctrine

Dividends come out of equity, but share price is determined by emotional humans, not book value. Again, Royal Bank fell by exactly the dividend ($0.84) because emotional humans decided for it to happen. The stock is already trending back towards the price the stock was at the open on ex-dividend day as emotional humans are forward looking and are now discounting future dividends into the stock price, not the past one. 

If at the next dividend, Royal Bank declared, "we are withholding this dividend payment to boost our share price", do you really think the stock price would not drop $0.84? In fact, it probably would drop ten times times that amount or more.

There is no faster way to wipe out capital gains or equity than by cancelling a dividend. The vast majority of investors value stocks based on discounting of future dividends. You would never see it reflected in a higher stock price.


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## Argonaut

It's a chicken and egg thing. Are dividend payers better companies, or do better companies pay dividends? I think it's a bit of both. The argument that's always attached to this point of view is that the dividend gives management discipline. Dividends are also very aligned with toll-both like companies, i.e. utilities, pipelines, telecoms. Collect toll, pay shareholder. Simple. Expansion of infrastructure in the case of these companies can be done with debt/equity rather than cash flow.


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## mordko

We need to define "dividend payers" vs "non-dividend payers". If we are talking about pure growth stocks which pay zero dividend, then yes - it is known that they underperform long term. Having said this, there have been long periods of times, like ~10, or 15 years, when growth stocks did much better. 

The trend that we are seeing now is not putting emphasis on value. People are focusing not on "dividend payers" but on "high dividend payers", often to the exclusion of most other criteria. It leads you to select banks, utilities and telecoms. In the same manner investors have been flocking to "low volatility". That term covers pretty much the same suspects. Yes, it's popular. Yes, these industry have done well. Recency always works, right? 

Will they outperform the market long-term? In-fashion stocks rarely do. And whatever gain you are achieving, you are doing it with a higher risk by having a highly concentrated portfolio.


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## Pluto

^
1. I don't believe there is such a thing as a "growth stock". Growth is a component of value. Of companies that are growing some don't pay dividends, and some do pay dividends. 
2. People who target banks, utilities, and telecoms are not looking at dividends to the exclusion of other factors. Other factors they look at are the amount of assets relative to debt, and the fact that such businesses still have customers during a recession and bear market. They are looking for stability, survivability, and reasonable predictability.


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## Eclectic12

Pluto said:


> ... Of companies that are growing some don't pay dividends, and some do pay dividends ...


The index is supposed to reflect the market as a whole.

From what I recall, for the S&P500, companies paying dividends was something like 80% and companies that didn't pay dividends was around 20%. For the Canadian composite, it was about 70% paying and 30% that didn't.

There seems to be a bit of a tilt to the field.


Cheers


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## james4beach

RY is making a worrying technical pattern here. It just made a death cross (50 day moving average falls below the 200 day).
http://stockcharts.com/h-sc/ui?s=RY.TO&p=D&yr=1&mn=0&dy=0&id=p06305692715

I can see two ways this might play out. One possibility is a correction like 2015 before the rally resumes. The other possibility is a more serious "top" followed by a prolonged decline. Usually if it's going that way, you'll see some high volume selling and maybe some sharp drops, which are indications that large funds are dumping the shares.

Nothing like that has happened yet so it's anyone's guess. There has been very low volume in RY for the last 3 months.

I am still long RY as part of my index sampling/replication.


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## humble_pie

james4beach said:


> RY is making a worrying technical pattern here. It just made a death cross (50 day moving average falls below the 200 day).
> http://stockcharts.com/h-sc/ui?s=RY.TO&p=D&yr=1&mn=0&dy=0&id=p06305692715
> 
> I can see two ways this might play out. One possibility is a correction like 2015 before the rally resumes. The other possibility is a more serious "top" followed by a prolonged decline. Usually if it's going that way, you'll see some high volume selling and maybe some sharp drops, which are indications that large funds are dumping the shares.
> 
> Nothing like that has happened yet so it's anyone's guess. There has been very low volume in RY for the last 3 months.
> 
> I am still long RY as part of my index sampling/replication.




time to sell calls. If one truly has the force of conviction, buy puts.

i'm a constant & chronic seller of calls, so my short RY calls were gone some time ago. I've also sold some puts that are comfortably far OTM at present. Nowhere near as many puts as calls since one cannot rule out a 2009 style crash that would halve canadian bank market prices.


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## Eder

If you want to sell wait till $110 in January...


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## Pluto

With a stock like RY, I'm not sure why this concerns you. A lot of people would see this as an oportunity to buy more at lower prices. 

Now if we were talking xyz small cap speculative momentum stock that, once plunged, might never come back, I'd think differently. And it it was a small cap momentum stock, you'd eant to be out of it long before any death cross. 

Relax, if it goes into super value territory, consider selling some of your bond stuff, and buy more ry.


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## Oldroe

Half price banks please!

Just coming into some money and love a good sale.


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## james4beach

Pluto said:


> With a stock like RY, I'm not sure why this concerns you.


High leverage into a credit tightening cycle and real estate bear market ... bad for any bank stock.


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## doctrine

By tightening credit market, you mean increasing net interest margins in a growing economy? Every 25 basis points could be worth up to $250M in annual profits three years out, depending on the size of the Cdn bank. I mean, look at the dismal performance in 2003-2007 tightening cycle, when the banks only doubled in price and doubled dividends.


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## doctrine

New all time high for RY today, both intra-day and closing. Guess it's doing okay.


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## OnlyMyOpinion

doctrine said:


> New all time high for RY today, both intra-day and closing. Guess it's doing okay.


Yup, no complaints
RY 171% over 10yrs
XIC 44% over 10yrs 
Of course if I'd known 10 yrs ago just how successful selling cheap stuff to the masses would be (no not SCC)... and had gone all in ..... 
DOL 1411% over 6yrs (and nearly all cap gains) :indecisiveness: 

View attachment 16602


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## james4beach

Yes, the game of hindsight is fun!

CSU +3405% in 10 years
BYD.UN +4552% in 10 years


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## doctrine

Unlike Boyd and Constellation, I'll just point out picking RY over the index is hardly either a risky or unknown pick, given the company has been one of the largest companies in the index for years. A good example of how you *can* get great long term returns out of a large cap. Cost of capital means something and large companies have a distinct advantage here.

Another all time high today. The first 52 week/all-time high will rarely be the last, as they say in TA.


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## gardner

RY has been on my buy-more list for several months and I keep waiting for it to go on sale -- I should have just bought it in August. But the run up this fall feels pretty unsustainable so I am still waiting. I have a bit over 200 shares already, and if the price streak continues I will no longer be underweight on RY anyhow.


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## milhouse

james4beach said:


> Yes, the game of hindsight is fun!
> 
> CSU +3405% in 10 years
> BYD.UN +4552% in 10 years


I'll just settle to go back for Netflix's +2000% in the last 5 years which I had been wanting in for all this time... "Nah, it can't go much higher, it's so overpriced..."


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## james4beach

doctrine said:


> Unlike Boyd and Constellation, I'll just point out picking RY over the index is hardly either a risky or unknown pick, given the company has been one of the largest companies in the index for years.


I agree, I was just being funny. As the largest weight in the index, RY will inevitably correlate strongly with the TSX. I own 200 shares not because I particularly like RBC, but because I'm unbundling XIU and takings its biggest weights.

And I realize everyone around here owns tons of bank stocks. That's not a surprise either, after all they have gigantic market caps which tells us that everybody owns them. Some might even say "over-owned".


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## milhouse

gardner said:


> RY has been on my buy-more list for several months and I keep waiting for it to go on sale -- I should have just bought it in August. But the run up this fall feels pretty unsustainable so I am still waiting. I have a bit over 200 shares already, and if the price streak continues I will no longer be underweight on RY anyhow.


RY has been on my list for a while too but I have 3 of the 5 big banks already so also looking for a good entry point.


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## james4beach

It's amazing how well these top constituents of the TSX have performed. Here are 5 year annual total returns for some of the biggest weights in the TSX:

RY 16%
TD 16%
CNR 21%
BMO 15%
MFC 20%

The financial stocks aren't too surprising because they correlate extremely strongly with US/global financial stocks, so it's not about Canada specifically but really about the global financial sector. With global central bank stimulus, banks get inflated, and the Canadian banks come along for this ride.


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