Are Canadian Banks in a Bubble?
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What is the main topic discussed in this episode?
Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business.
Just my reminder to people who own cyclicals, don't be surprised when there's a cycle.
If there's uncertainty in the markets, there's going to be some great opportunities for investors.
This has to be one of the biggest quarters I've seen from this company in quite some time.
Welcome to the Canadian Investor Podcast. I'm Simon Belanger. I'm here with Dan Kent. We have a fun episode coming up today. We'll be starting with a recent article that was published by David Rosenberg in the Globe and Mail asking if Canadian banks are in a bubble. So we'll go over that and you'll give your thoughts. I'll give my thoughts as well. We'll be showing some charts. So if you're hearing this on audio, you can always hop on YouTube and The full video will be posted on YouTube as well. Our Patreon subscribers at join TCI dot com do get it early and early release for the full video. But YouTube, it will be posted on Monday and we'll be just showing some charts whether we agree or not with David.
And then afterwards, we'll be talking about bonds and what? whether they still have a place in your portfolio. So about a month or three weeks ago, we did an episode where we talked about bonds versus bond ETFs, and we generally looked at it, whether it was still a good look or not for the portfolio. But we only went over at a glance for that more specifically in this one i'll specifically look at whether bonds or bond etf makes sense in a portfolio going forward some of the risk versus some of the historical returns and why the 60 40 portfolio has performed so well so some really interesting charts that i'll be sharing with that but we'll get started with the canadian banks because i think this is where a lot of people are looking forward to whether
David Rosenberg is out to lunch or not. Are the banks in a bubble? Dan, get us started on that.
Yeah, so I think the term bubble is kind of thrown around way too loosely now. Whether it's, I mean, this whole AI thing that is causing a lot of bubble talk, but it just seems like every... industry or sector that gets slightly expensive, people start calling a bubble. I don't think you can call these companies... They're trading at 17x earnings and posting, right now, 17 plus percent returns on equity. I don't really think you can call them a bubble. I mean, there is plenty of... bubble-ish spaces, I guess, on the market that I would say, and I really don't think banks are one of them. I'm not really all surprised at the title of the article, however, because, I mean, it gets clicks. The one thing I will say, because...
A lot of people will probably be paywalled from this because it's on the Globe and Mail. Yeah. The article is not as bad as the title makes it out to be. It's actually a pretty reasonable piece talking about the banks. So if you can't read it, it's not as bad as it seems. He's not saying these banks are going to collapse and they're in a bubble. He's mostly just talking about how they're getting a bit too expensive right now. And this is... as you had mentioned coming from i would call him a perma bear david rosenberg he's he's kind of another one of those guys who kind of like burry predicted the the 2008 crash but then kind of went on to predict numerous other you know kind of bearish scenarios over like two decades
Yeah, isn't it the line where he's predicted the last 10 crashes that never happened or something like that? He's predicted nine of the last two recessions. Now, to be fair, I've listened to him quite a bit. He's been on podcasts. I've read a lot of his stuff as well. And he's a very smart guy. He's into the data. And like we were talking before recording, I think we could look back in 10 years from now, 15 years from now. And just look back at some of the predictions that David Rosenberg did and just say, OK, he was just early on those predictions. Of course, in investing early is as bad sometimes as being wrong.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–9:47
2
Are Canadian banks really ‘in a bubble’ as David Rosenberg suggests?
9:47–10:09
3
Why do the hosts think the term ‘bubble’ is overused for banks?
10:09–36:29
4
Which valuation metrics show Canadian banks trading expensive today?
36:29–45:22
5
How much of recent bank earnings growth is driven by declining provisions and capital markets?
45:22–48:08
Speakers
3 identifiedMore from The Canadian Investor
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