# RY Sell or Hold?



## Van Couver (Nov 24, 2016)

Just curious for some opinions. Just a few months ago I bought 8900 shares of RY for around $79, primarily for the dividend income, although I registered for the DRIP. The recent quick run up to $90 has seriously got me thinking about selling maybe 1000 shares to take some profit off of the table. My concern is that up until now, the majority of my investing has been buy and hold type stuff. Not sure if I'd be doing the right thing. But booking a nearly $100k gain would be nice. 

Also, if I do sell some shares and the proceeds remain in my non-registered account, are the gains taxable upon the sale or on the withdrawal from the account?

Would appreciate any input. Thanks!


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## mordko (Jan 23, 2016)

In a regular account the tax is due in the year when you sell. Only RRSP taxes you on withdrawals. 

Whether you sell and when surely depends on your investment strategy.


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## OnlyMyOpinion (Sep 1, 2013)

Another consideration, do you have any 'losers' in your portfolio that show a capital loss that you do not want to hold any more? If so, you could sell them and match the loss by selling sufficient RY shares at a gain and pay no capital gains tax (tax loss selling). You can then buy your RY back, this will adjust the ACB of your RY shares upward. We've just done this in our acc.


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## Van Couver (Nov 24, 2016)

mordko said:


> In a regular account the tax is due in the year when you sell. Only RRSP taxes you on withdrawals.
> 
> Whether you sell and when surely depends on your investment strategy.


I guess I was thinking of capital gains reserves, but upon closer inspection, it doesn't look like that would apply here.




OnlyMyOpinion said:


> Another consideration, do you have any 'losers' in your portfolio that show a capital loss that you do not want to hold any more? If so, you could sell them and match the loss by selling sufficient RY shares at a gain and pay no capital gains tax (tax loss selling). You can then buy your RY back, this will adjust the ACB of your RY shares upward. We've just done this in our acc.


The only losers I held were in my RRSP and I finally sold them last year. Got kinda tired of looking at RIM/Blackberry after paying $129 per share...lol


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## CPA Candidate (Dec 15, 2013)

Trimming the position would be a prudent move in my opinion. Early in the year investors hated RY and took it down to $68. Now they love it. All these sentiments are temporary. Nothing has fundamentally changed for the company and it's looking very rich right now.


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## mordko (Jan 23, 2016)

^ One or two things have changed. Like interest rate expectations have moved in a different direction, oil prices, etc...


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## jerryhung (Mar 28, 2011)

all I can say is, wow, 8900 x $79 = $703100 in ONE stock... not much diversification? unless your port is $10M+ 

Glad it worked out very well
Without knowing the %, hard to say trim or not. I'd trim


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## humble_pie (Jun 7, 2009)

OnlyMyOpinion said:


> Another consideration, do you have any 'losers' in your portfolio that show a capital loss that you do not want to hold any more? If so, you could sell them and match the loss by selling sufficient RY shares at a gain and pay no capital gains tax (tax loss selling). You can then buy your RY back, this will adjust the ACB of your RY shares upward. We've just done this in our acc.




an excellent strategy

partial selling is also useful even when an investor has no offsetting losses to claim. One is careful to sell only the number of shares whose gain will *not* push one into the next higher tax bracket. This magic number is usually only a fraction of total holding of the security in question.

as onlyMO posts, one then rebuys the shares & thus pushes the cost base for all shares up. Not only will ACB of total holding rise, but ACB per share will also rise.

many buy-&-holders are arriving at retirement age with very large paper capital gains. Eventually the tax piper will have to be paid. One workaround is to keep taxable gains as low as possible, by systematically raising the cost base slightly for just one security (rotate the candidates), in a disciplined manner, every year of one's life.

the above strategy cannot be carried out in a rush. It can't be done in the last few years of one's life nor can it be done immediately prior to permanent departure from canada. 

.


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## Video_Frank (Aug 2, 2013)

jerryhung said:


> all I can say is, wow, 8900 x $79 = $703100 in ONE stock... not much diversification? unless your port is $10M+


I came here to say this - that's a lot of money in one stock.


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## Van Couver (Nov 24, 2016)

jerryhung said:


> all I can say is, wow, 8900 x $79 = $703100 in ONE stock... not much diversification? unless your port is $10M+
> 
> Glad it worked out very well
> Without knowing the %, hard to say trim or not. I'd trim


No, my portfolio is not $10 million+, but it's solidly in the 7 figure range. I'm just at the stage where I want to invest in what I know rather than diversification for diversification's sake. I've had enough losers drag down my winners over the years. 

Historically, RY has paid a dividend forever and a day, and even during the financial down turn years ago, they never cut their dividend. My feeling is that if a company can weather that storm mostly unscathed, then it's good enough for me. And I'm completely comfortable on the stock even if I'm overweight on it.


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## Van Couver (Nov 24, 2016)

CPA Candidate said:


> Trimming the position would be a prudent move in my opinion. Early in the year investors hated RY and took it down to $68. Now they love it. All these sentiments are temporary. Nothing has fundamentally changed for the company and it's looking very rich right now.


These are my basic thoughts. I made the investment primarily for the dividend, so having fewer shares would mean less on the quarterly distribution, but nowhere near what the cash out would be.


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## Van Couver (Nov 24, 2016)

humble_pie said:


> canadian bank stocks are ultra-low-maintenance investments. Docile. Uncomplaining. Profitable. Cost-free. Workhorses.
> 
> .


Just read this from another thread. I should have posted this to sum up why someone might want to put a lot of money into one stock.


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## DavidW (May 27, 2016)

humble_pie said:


> an excellent strategy
> 
> partial selling is also useful even when an investor has no offsetting losses to claim. One is careful to sell only the number of shares whose gain will *not* push one into the next higher tax bracket. This magic number is usually only a fraction of total holding of the security in question.
> 
> ...


Sounds like a good reason why the investor should be the one responsible for keeping track of, and knowing the current ACB, of the equity positions in all of their accounts. Planning to fail, even if only on one equity position doesn't sound like a good habit to get into. I have one equity that is now in such a scenario due to having to sell... something... to handle a recent currency/market fluctuation. The increase didn't happen because of strategy though, it happened because the equity still fits my plan and I still have confidence in the equity.

Is it the kids or the parents going on the trip?


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## humble_pie (Jun 7, 2009)

Van Couver said:


> Just read this from another thread. I should have posted this to sum up why someone might want to put a lot of money into one stock.



aye, banks are that. docile. uncomplaining. profitable. cost-free. workhorses.

still, i do believe you should be holding 3 of them. Three canadian banks are good enough, no need to bother with all. Canadian banks compete intensely so if one falls behind in a sector it will do its utmost to catch up over the next few years.

i believe the times are right for some kind of tax move by yourself, though. As you know, onlyMO & this tart favour a small partial selling. Ideally, be prepared to re-buy, it will raise your cost base, not to speak of restoring the missing dividends.

here's a truly naughty thought: do the above, but to capture extra capital gain you could sell call options. Sell OTM but closer-to-the-money if you have reason to believe RY will drop soon. Sell farther OTM if you think it still has upside potential.

don't sell all options (you should be good for 89 of them.) Try with only 10 or 20, see how it goes.

.


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## hboy54 (Sep 16, 2016)

I don't in general see this scenario as a candidate for any action. You are up about 12% on RY. Chances are the rest of the portfolio is up about half this much also. So to 1 significant figure, you have the same weighting you started with.


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## lonewolf :) (Sep 13, 2016)




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## Pluto (Sep 12, 2013)

there is considerable optimism in this market, and if one is inclined to sell, sell. It sure is a crappy time to buy ry with it p/e about historical highs for banks.


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## humble_pie (Jun 7, 2009)

Pluto said:


> there is considerable optimism in this market, and if one is inclined to sell, sell. It sure is a crappy time to buy ry with it p/e about historical highs for banks.



pluto several cycles ago i recall reading a study that said canadian bank stocks tend not to fall when heading into a rise in interest rates. Instead, the article's charts showed that banks stocks historically rose, at least in the early months if not the first entire year or 2 of an up-cycle's life.

would you have an opinion to share though. May i say i am not waiting with bated breath, i've been permanently married to bank stocks since childhood - my godmother married me off as an infant - & i shall probably remain wedded for the rest of my life.

it's a good relationship. As mentioned, the partner is good-humoured, low-maintenance & reliable. There are a few sneakings around, like having too many derivatives hidden in back pockets, but all in all he doesn't drink & he's a good provider. He's even arranged a hedge for himself at taxpayer expense - the CMHC - in case canadian housing prices collapse.

.


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## daddybigbucks (Jan 30, 2011)

Its always tempting to sell when you have a run-up.

Banks have flatlined for a while, i think there is more room to run up.

Unless you have better stock to place the money, i wouldnt sell.

I never even look at my banking stocks. They are the backbone of my portfolios.
i only add.


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## Pluto (Sep 12, 2013)

humble_pie said:


> pluto several cycles ago i recall reading a study that said canadian bank stocks tend not to fall when heading into a rise in interest rates. Instead, the article's charts showed that banks stocks historically rose, at least in the early months if not the first entire year or 2 of an up-cycle's life.
> 
> would you have an opinion to share though. May i say i am not waiting with bated breath, i've been permanently married to bank stocks since childhood - my godmother married me off as an infant - & i shall probably remain wedded for the rest of my life.
> 
> ...


I'm not inclined to sell my RY, or any of my bank stock. Trading is too much drama for me right now. Its only if one is inclined to sell, its better to sell into an optimistic rally compared to a pessimistic decline. 
That said, I don't see a lot of upside to RY right now. I'm remembering how financial's (xfn) reacted last Jan and Feb after a tiny US rate increase. 
I get the idea that a decent spread between short and long rates helps banks and insurance earnings....so this is an enigma for me right now. Perhaps this current rally is just discounting future benefit to earnings assuming a rate rise in Dec. Traders could take profits upon the news of a rate rise because they might think the benefit is already priced in.


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## birdman (Feb 12, 2013)

If rates go up Banks prosper as their financial margin increases. Spreads between demand deposits (chequing, savings, and short dd GIC's) and the prime rate are extremely tight and I expect are at their historical lows. If rates go up don't expect your saving rate to go up the same amount.


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## doctrine (Sep 30, 2011)

I like RY as much as the next guy, and have held shares for years. It's a hold for me, not a buy, and if I was crazy overweight (I'm not) then I would consider rebalancing. A couple of times I nearly bought some RY in the $70-75 range this year but ended up in NA and BNS instead (also done quite well). The trailing P/E is 13 - it's very much near the high end of its range in the last 5 years certainly. It is exposed to potential higher growth in the US, especially in capital markets, but I think it's a little overdone.

You bought at $79, so you might want to consider selling a little. Many people have a far lower cost basis - mine is near $59, so it is a much larger capital gain for me, and probably not worth it even if I was a little overweight.


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## Van Couver (Nov 24, 2016)

Just to clarify, I made this trade in early/mid September, after my wife and I sold our home in Vancouver and downsized. I used some of the proceeds from the sale to buy the shares really just for the dividend income, not at all expecting a short term gain like this. I just figured that taking a bit of profit.....you know, the whole "no one ever went broke taking a profit" thing....might be a good idea. I do feel that maybe it's a bit overvalued in relation to some peers, but again, as long as the dividend keeps rolling, the underlying price really doesn't matter I suppose.


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