Should You Sell Your Bank Stocks?

Lots of chatter and lots of articles telling people that the heyday for now is over. Canadian Banks should be sold as losses will widen due to overextended consumer debt.

That is why interest rates are falling after 5 raises last year. There is rampant speculation that in fact there will be a cut this year. That will make mortgages cheaper, the short end of the yield curve will sell off and fall lower. It's already went from 3% to 2.3%.

This will also fuel house buying as mortgages get cheaper and new buyers dying to get into the market will feel better paying lower rates after being scared off last year with all the raises in rates.

So why sell your investments in Canadian Banks?

Only if you need the money of course. Other than that if you are a long term investor you just hold fast and maybe even buy more stock if there is a sell off.

This could be a tremendous opportunity to add to existing positions if you're a retail investor.

We don't need to sell to impress the manager with stellar stock returns. Those people need to justify bonus money and lock in gains when they can. Just ignore what they'e doing and hold or even buy more. That's my plan anyway.

What's the downside of staying invested in your Canadian banks?

They are trading at such cheap P/Es averaging around 11 times forward earnings. I will be loading up on my 3 biggest positions in RY, TD and BNS.

Some of my bank stocks are up well over 20% so there is no way I'm selling anything. Analysts are predicting a 20% drop.

Focus on the income they generate. No Canadian bank has cut their dividend since 1947 according to David Baskin of Baskin Financial. 

Most are averaging a 4% yield so sit back, collect that money and go for a walk.

Never exit any asset class especially Canadian banks in my opinion.

NEVER GAMBLE WITH MONEY YOU HAVE SAVED FOR RETIREMENT!

Looking for Saving Ideas So You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 

If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

If you want to read more about the theory and methodology of some of Canada's professional investment/portfolio managers then you need to pick up a copy of the book 'Market Masters'. Robin Speziale conducts interviews with top money mangers in Canada using a set of pre-arranged questions. This will give you a real insight into how others invest money and how they think. A must read!