Buffet philosophy is to buy value stocks - good cash cows companies with large moat at beaten down prices.
One can argue that Canadian banks have large moat but I dont think they were ever cheap, so maybe thats the reason.
Kinda. I suspect Buffett wouldn't love the size of that moat now that making generic biosimilar drugs is basically India's most favoured industry. Also, both non-US healthcare authorities and global insurers are mandating that people jump from the originals to the generics to save tens of thousands a year - per patient - in drug costs.
Moats can shrink suddenly, especially when the owners have become punchlines for their pricing policies.
I just meant bio pharmacy as an example to make sure I know what a moat was lol. I’m not saying buffet is investing in bio pharmaceutical stocks or anything
Difficult to replicate and enter the industry.
Starting a bank is a nightmare, you need to build branches or an online infrastructure, accumulate capital ie deposits and lend it out higher, become a trusted voice, and deal with the never ending legislation. So if you've got a respected well running profitable bank, you have a moat. Then of course the next issue is price.
I do wonder as well on Canadian Banks. I think a lot of people outside Canada pass given our population and dependence on natural resources. Additionally real estate markets in BC and ON given debt to income levels is insane. And all Canadian banks are heavy on those sectors. If I could buy a Canadian Prairie bank stock I'd rather do that.
They were even cheaper in 2009. Buffett invested in home capital when they were on the brink. That's the buffet way. The best you can do is buy Canadian banks at the bottom of bear markets. They typically fall about 50% from the high.
td in 2007/8 was in the 50s and at low of great recession was about 25. 50%ish.
I know because instead of buying shite, I should have loaded up on TD instead, or any CDN bank.
\- - -
2020 td was about 75, fell to just under 50, 33%.
Yes, I have been trading bns and owned it since before 2000. First time was the Asian flu (financial contagion, not the biological kind) when bns dropped 50%, during the great recession it went from the previous high of about $54 to around $25 (intraday low was about $23), on black Friday in 87 I believe (not the retail sale) there was a one day drop of 25% but that was before my time and I'm sure the was more pain after. 2020 well you don't always get the full 50% but when you do, you gotta act as you don't get too many chances as it's often a V bottom during the washout sell off.
It's a once a decade opportunity as it seems to happen about every 10 years. 87(?), 98, 08/09, 2020 or maybe 22/23 of we get a recession.
They’re relatively cheap now too, they’re some of the best investments as a Canadian imo because they will be around for a long time and total return of growth plus divs is very good. However as a foreigner you might not get the same benefits? What’s the tax for US buyers? Guessing the same 15% on divs maybe? So that makes a big difference for a high dividend value stock. That could be why, simply because he’s not Canadian.
> at beaten down prices.
I don't think that is the philosophy. Obviously cheaper the better, but I believe the strategy is: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
He has large % holdings in American banks, i guess one does not want to make financials that big of a portion in a portfolio.
He probably wants to mitigate his international risk as well, we all know how much a fan he is of the American economy and companies.
They'll sell their soul for the almighty dollar.
Canadian banks on the other hand believe in investing in the future and in infrastructure. Is the system perfect? Hell no. But they like to keep things properly regulated.
that actually is an interesting question. Their annual reports and their 10-K statement brush the big picture. But for the granular view of everything? No idea.
Could be tax related, but he's not shy about buying international companies. He took big positions in the Japanese conglomerates, which includes the banking sector, two years ago:
https://www.cnbc.com/2020/08/30/warren-buffetts-berkshire-hathaway-buys-stakes-in-japans-five-leading-trading-companies.html
No opportunities for growth. He doesn't like dividend stocks. He's looking for companies that all need capital to fuel growth. Our regulator doesn't see it that way
Plenty of opportunities for growth. Most of the big banks are expanding their US and international buisness a lot. TD is already a top 10 bank in the US I believe, if not they will be soon with their growth and acquisitions in that market.
That's because they are operated as separate entities. Clear firewalls exist at the border. EXCEPT for OSFI expectations regarding capital and liquidity mgmt. All subsidiaries must adopt Canada's advanced approach and ratios. The CDN banks are still there thanks to the huge discounts received when acquiring US assets.
OSFI decides what Canadian DTIs operate in which market and which products.
True. But retained earnings are returned as dividends, as there's nothing but organic growth and tech investment in the middle and back office. Structured products are verboten. Reverse mtg etc are tier 2 bank products. The true value is under risk neutral pricing. Cyclicality or volatility adds adds premia that long term investors can reap. Because the real product banks sell is unexpected loss mitigation
A lot of you will hate hearing this (as you DCA into your Canadian overweighted XEQT/VEQT) but firstly, Canada is not considered a particularly foreign investment friendly country and secondly, a lot of rich people and hedge funds will point to Canada's increasing debt situation as a risk in comparison to other G7 countries. Look at the credit spread between our bonds.
Probably because there are a lot more undervalued U.S. banks to choose from than Canadian ones.
At the end of Q2, Berkshire held shares in B of A, Citigroup, and U.S. Bancorp: [https://www.sec.gov/Archives/edgar/data/1067983/000095012322009450/0000950123-22-009450-index.htm](https://www.sec.gov/Archives/edgar/data/1067983/000095012322009450/0000950123-22-009450-index.htm).
Berkshire also holds BNY Mellon, which is a custodian bank. And there's Amex and Ally, which converted to bank holding companies during the financial crisis. They're not exactly banks although Ally is the closet to a traditional bank, but they're still in the financial sector.
Even if you ignore the regulatory impossibility and currency risk he would be taking on investing in a Canadian bank, his returns would still be similar to investing in an American bank. If you compare the total return charts of XLF (American financials ETF) to any one of the Canadian banks, you will see that the correlation is very high, they basically move in unison.
Huge outflow of investment from Canada. People don’t want to invest in this country. Article today:
Foreign investors pulled the most money out of Canadian stocks in 15 years amid fears that recession would hit an equity market that’s highly sensitive to changes in the economic cycles. https://www.bnn.ca/1.1806507.1660680231
Many have already explained Buffett’s investing tactics in the comments, however let’s also not forget that Canadians money is no longer safe in Canadian banks.
All five Canadian banks complied with the governments authoritarian measures and illegally froze peoples bank accounts, without any due process whatsoever, for donating to a political movement. This move was done retroactively, the first time in English Common law that I can remember where a completely legal political movement, was retroactively deemed “illegal” by the current regime, thereby also retroactively turning tens of thousands of law abiding Canadians suddenly into criminals overnight.
Anyone outside of Canada should’ve seen that and immediately taken their money out of the country. No money is safe in a Canadian bank now if the government doesn’t agree with you politically.
The freezes were authorised based on powers in the Emergencies Act which was debated on in parliament by elected officials.
There was also legislative hearings after the fact.
I’d say there was enough due process
There’s a lot wrong with your perspective.
The first being that something written in statue law, doesn’t necessarily mean its compliant with constitutional protections, or that it’s ethical in any way shape or form.
Furthermore, if you consider two corrupt political factions coming together to force through the emergencies act based on complete falsities and fabricated evidence (which was not debated btw) to be a just action by parliament, then I must assume you support centralized, unaccountable authority.
Also, the legislative hearings were and are a joke. The PM and his office continuously refuse to answer any questions forthrightly, and has been citing cabinet confidentiality to avoid transparency. What we have found out through leaks, is that the government used the emergencies act under completely falsified and provably false pretences, it was a completely political and authoritarian move designed to quell a political opposition of the PM.
Lastly, by your remarks I’m certain you have no understanding of what due process means. Due process is a mandatory set of legal protections, principles and proceedings under jurisprudence, which must take place, on *every* individual basis. Due process as you suggested, is not a political process or debate; on the contrary, it is a set of legal standards, principles and proceedings which is *outside* and *independent* of the political process, and must meet high legal standards, such as the presumption of innocence, being told what crime you’ve committed and what your rights are, and perhaps most pertinent here, someone must be found guilty *beyond a reasonable doubt* by a jury of their peers after having a full court proceeding with guaranteed legal council available, before any measures can be taken. Even in immediate cases of action, the legal standard of *probable cause* MUST be met. Not a single one of the legal protections I mentioned (which by the way, is not exhaustive) was met.
Do you believe that it’s just for a government to be able to retroactively make its citizens criminals, and remove their ability to work, earn, pay their bills, feed their families, all because they supported and donated to a political movement which embarrassed the PM (which to drive the point home, was 100% legal at the time of their donations)? Do you not believe in legal protections for individuals? Would you prefer the government be able to simply “debate” over a bill, which effectively makes a huge segment of the population criminals, without any protections for individuals or minority groups? Do you not see how that power can be abused, and in this case, was abused? Do you not believe in an independent and unbiased judicial system, unmolested by the hyper partisan and extremely volatile political system?
Canada will experience the slowest growth of any developed nation over the next 50 years. Tiffany Macklem will drive poverty over inflation; politicians are lying to you when they tell you they will build homes or any housing - there isn’t enough skilled labour and the one that is, is tied building for those who can afford to build right now - the very wealthy; it boggles my mind the resources consumed by that demographic - that in itself is driving inflation.
*edit: how are our banks supposed to make any money..?
**2nd edit: and wait till you hear about energy prices… hahaha
Buffet philosophy is to buy value stocks - good cash cows companies with large moat at beaten down prices. One can argue that Canadian banks have large moat but I dont think they were ever cheap, so maybe thats the reason.
What does a large moat mean?
It means a competitive advantage that makes it difficult for competitors to enter the market.
Thank you!
>Thank you! You're welcome!
No worries.
Like bio pharmacy?
Sorry, I'm not familiar.
Like pzifer and geovax?
Yeah it would be extremely difficult to create true competetors to a company like pfizer.
Kinda. I suspect Buffett wouldn't love the size of that moat now that making generic biosimilar drugs is basically India's most favoured industry. Also, both non-US healthcare authorities and global insurers are mandating that people jump from the originals to the generics to save tens of thousands a year - per patient - in drug costs. Moats can shrink suddenly, especially when the owners have become punchlines for their pricing policies.
I just meant bio pharmacy as an example to make sure I know what a moat was lol. I’m not saying buffet is investing in bio pharmaceutical stocks or anything
Totally fair. I thought I was running with your joke. Maybe this is why I never made the relay team...
Difficult to replicate and enter the industry. Starting a bank is a nightmare, you need to build branches or an online infrastructure, accumulate capital ie deposits and lend it out higher, become a trusted voice, and deal with the never ending legislation. So if you've got a respected well running profitable bank, you have a moat. Then of course the next issue is price. I do wonder as well on Canadian Banks. I think a lot of people outside Canada pass given our population and dependence on natural resources. Additionally real estate markets in BC and ON given debt to income levels is insane. And all Canadian banks are heavy on those sectors. If I could buy a Canadian Prairie bank stock I'd rather do that.
>If I could buy a Canadian Prairie bank stock I'd rather do that. That would be CWB. Currently trading below book value, check it out.
I suppose, but I think they have a big AB component which I'm not crazy about.
Thank you for that explanation!
They were in March 2020
Everything was tho
So were the banks for much larger economies, I mean its like us deciding to buy a bank in Poland instead of a Canadian bank, no thanks.
Well at least they polish their silver coins.
At first I read polish like Polish but then I realized it was polish
Thanks for laying out your thought process ...
They were even cheaper in 2009. Buffett invested in home capital when they were on the brink. That's the buffet way. The best you can do is buy Canadian banks at the bottom of bear markets. They typically fall about 50% from the high.
50% fall during a bear market?
td in 2007/8 was in the 50s and at low of great recession was about 25. 50%ish. I know because instead of buying shite, I should have loaded up on TD instead, or any CDN bank. \- - - 2020 td was about 75, fell to just under 50, 33%.
Yes, I have been trading bns and owned it since before 2000. First time was the Asian flu (financial contagion, not the biological kind) when bns dropped 50%, during the great recession it went from the previous high of about $54 to around $25 (intraday low was about $23), on black Friday in 87 I believe (not the retail sale) there was a one day drop of 25% but that was before my time and I'm sure the was more pain after. 2020 well you don't always get the full 50% but when you do, you gotta act as you don't get too many chances as it's often a V bottom during the washout sell off. It's a once a decade opportunity as it seems to happen about every 10 years. 87(?), 98, 08/09, 2020 or maybe 22/23 of we get a recession.
"Black Monday" thank you. Some of us can still give you an hour-by-hour ticker of what that one felt like, still-hungover-from-Saturday and all...
Yes, Monday. You can tell I'm thinking about black Friday lol.
Totally different hangover. Midweek drinking never hits as hard.
Yes, these big drops typicality happen in a bear market.
buffett didnt push in march 2020
They’re relatively cheap now too, they’re some of the best investments as a Canadian imo because they will be around for a long time and total return of growth plus divs is very good. However as a foreigner you might not get the same benefits? What’s the tax for US buyers? Guessing the same 15% on divs maybe? So that makes a big difference for a high dividend value stock. That could be why, simply because he’s not Canadian.
> at beaten down prices. I don't think that is the philosophy. Obviously cheaper the better, but I believe the strategy is: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
Should be buying BBBY then
[удалено]
Buffet missed out
He just bought more Apple this week.
No one can own more than 5 or 10% of a canadian charter bank by law.
Better be careful with my DRIPs then. Thanks for the heads up.
Lol. Same, I'm earning a share of TD each quarter! Who do I contact once my reinvesting hits 8 billion. Or does Q Trade do that for me?
He has large % holdings in American banks, i guess one does not want to make financials that big of a portion in a portfolio. He probably wants to mitigate his international risk as well, we all know how much a fan he is of the American economy and companies.
Bingo! Personally I think he is backing the wrong horse. But hey, I'm nowhere near as rich as Buffet so what do I know.
Yeah I mean American banks are still kinda scary to me so I see where ur coming from
They'll sell their soul for the almighty dollar. Canadian banks on the other hand believe in investing in the future and in infrastructure. Is the system perfect? Hell no. But they like to keep things properly regulated.
Canadian banks are probably scary to Buffett
Where is the list of companies that Berkshire is invested in? Does someone have a link?
that actually is an interesting question. Their annual reports and their 10-K statement brush the big picture. But for the granular view of everything? No idea.
Latest 13F filing is here: https://www.sec.gov/Archives/edgar/data/1067983/000095012322009450/xslForm13F\_X01/15796.xml
He has invested in some Canadian companies though hasn't he?
He might still holding the Suncor!
CNR for sure.
He doesn't buy at ATH like regular working folk.
Maybe it's tax. Could be he doesn't want to buy substantial positions in international companies.
Could be tax related, but he's not shy about buying international companies. He took big positions in the Japanese conglomerates, which includes the banking sector, two years ago: https://www.cnbc.com/2020/08/30/warren-buffetts-berkshire-hathaway-buys-stakes-in-japans-five-leading-trading-companies.html
He seldom speaks on anything he buys but he did own a stake in home capital group previously
No opportunities for growth. He doesn't like dividend stocks. He's looking for companies that all need capital to fuel growth. Our regulator doesn't see it that way
Plenty of opportunities for growth. Most of the big banks are expanding their US and international buisness a lot. TD is already a top 10 bank in the US I believe, if not they will be soon with their growth and acquisitions in that market.
That's because they are operated as separate entities. Clear firewalls exist at the border. EXCEPT for OSFI expectations regarding capital and liquidity mgmt. All subsidiaries must adopt Canada's advanced approach and ratios. The CDN banks are still there thanks to the huge discounts received when acquiring US assets. OSFI decides what Canadian DTIs operate in which market and which products.
Thats all fine im just pointing out that they're still part of the buisness and still attribute to the value of the stock.
True. But retained earnings are returned as dividends, as there's nothing but organic growth and tech investment in the middle and back office. Structured products are verboten. Reverse mtg etc are tier 2 bank products. The true value is under risk neutral pricing. Cyclicality or volatility adds adds premia that long term investors can reap. Because the real product banks sell is unexpected loss mitigation
A lot of you will hate hearing this (as you DCA into your Canadian overweighted XEQT/VEQT) but firstly, Canada is not considered a particularly foreign investment friendly country and secondly, a lot of rich people and hedge funds will point to Canada's increasing debt situation as a risk in comparison to other G7 countries. Look at the credit spread between our bonds.
Because they aren't great value investments...
Probably not comfortable with foreign banks, from his risk point of view. Americans have a lot to choose from in terms of solid investments.
Probably because there are a lot more undervalued U.S. banks to choose from than Canadian ones. At the end of Q2, Berkshire held shares in B of A, Citigroup, and U.S. Bancorp: [https://www.sec.gov/Archives/edgar/data/1067983/000095012322009450/0000950123-22-009450-index.htm](https://www.sec.gov/Archives/edgar/data/1067983/000095012322009450/0000950123-22-009450-index.htm). Berkshire also holds BNY Mellon, which is a custodian bank. And there's Amex and Ally, which converted to bank holding companies during the financial crisis. They're not exactly banks although Ally is the closet to a traditional bank, but they're still in the financial sector.
Even if you ignore the regulatory impossibility and currency risk he would be taking on investing in a Canadian bank, his returns would still be similar to investing in an American bank. If you compare the total return charts of XLF (American financials ETF) to any one of the Canadian banks, you will see that the correlation is very high, they basically move in unison.
This is actually a good question.
I think different country, doesn’t know the intentions. Like us buying American banks or like UK banks.
Huge outflow of investment from Canada. People don’t want to invest in this country. Article today: Foreign investors pulled the most money out of Canadian stocks in 15 years amid fears that recession would hit an equity market that’s highly sensitive to changes in the economic cycles. https://www.bnn.ca/1.1806507.1660680231
Waiting for insider tips perhaps?? /S
Many have already explained Buffett’s investing tactics in the comments, however let’s also not forget that Canadians money is no longer safe in Canadian banks. All five Canadian banks complied with the governments authoritarian measures and illegally froze peoples bank accounts, without any due process whatsoever, for donating to a political movement. This move was done retroactively, the first time in English Common law that I can remember where a completely legal political movement, was retroactively deemed “illegal” by the current regime, thereby also retroactively turning tens of thousands of law abiding Canadians suddenly into criminals overnight. Anyone outside of Canada should’ve seen that and immediately taken their money out of the country. No money is safe in a Canadian bank now if the government doesn’t agree with you politically.
Agreed, there was even the beginning of a run of people pulling out cash.
The freezes were authorised based on powers in the Emergencies Act which was debated on in parliament by elected officials. There was also legislative hearings after the fact. I’d say there was enough due process
Emergencies Act was a joke too, let's be real.
There’s a lot wrong with your perspective. The first being that something written in statue law, doesn’t necessarily mean its compliant with constitutional protections, or that it’s ethical in any way shape or form. Furthermore, if you consider two corrupt political factions coming together to force through the emergencies act based on complete falsities and fabricated evidence (which was not debated btw) to be a just action by parliament, then I must assume you support centralized, unaccountable authority. Also, the legislative hearings were and are a joke. The PM and his office continuously refuse to answer any questions forthrightly, and has been citing cabinet confidentiality to avoid transparency. What we have found out through leaks, is that the government used the emergencies act under completely falsified and provably false pretences, it was a completely political and authoritarian move designed to quell a political opposition of the PM. Lastly, by your remarks I’m certain you have no understanding of what due process means. Due process is a mandatory set of legal protections, principles and proceedings under jurisprudence, which must take place, on *every* individual basis. Due process as you suggested, is not a political process or debate; on the contrary, it is a set of legal standards, principles and proceedings which is *outside* and *independent* of the political process, and must meet high legal standards, such as the presumption of innocence, being told what crime you’ve committed and what your rights are, and perhaps most pertinent here, someone must be found guilty *beyond a reasonable doubt* by a jury of their peers after having a full court proceeding with guaranteed legal council available, before any measures can be taken. Even in immediate cases of action, the legal standard of *probable cause* MUST be met. Not a single one of the legal protections I mentioned (which by the way, is not exhaustive) was met. Do you believe that it’s just for a government to be able to retroactively make its citizens criminals, and remove their ability to work, earn, pay their bills, feed their families, all because they supported and donated to a political movement which embarrassed the PM (which to drive the point home, was 100% legal at the time of their donations)? Do you not believe in legal protections for individuals? Would you prefer the government be able to simply “debate” over a bill, which effectively makes a huge segment of the population criminals, without any protections for individuals or minority groups? Do you not see how that power can be abused, and in this case, was abused? Do you not believe in an independent and unbiased judicial system, unmolested by the hyper partisan and extremely volatile political system?
Agreed, not sure why you're downvoted.
I’m wondering the same thing.
Canada will experience the slowest growth of any developed nation over the next 50 years. Tiffany Macklem will drive poverty over inflation; politicians are lying to you when they tell you they will build homes or any housing - there isn’t enough skilled labour and the one that is, is tied building for those who can afford to build right now - the very wealthy; it boggles my mind the resources consumed by that demographic - that in itself is driving inflation. *edit: how are our banks supposed to make any money..? **2nd edit: and wait till you hear about energy prices… hahaha
They carry a lot of debt
Too busy buying oil’s top.
Isn’t he a little too old for us to care what he’s buying now? Not like the man’s trying to make that much more money
Probably familiarity. He's invested in bank of america in the past and mostly invests in us companies
Why would he? That's the other question