Thursday, October 25, 2007

Going against the flow

Considering their impressive track record as profit-making, dividend-paying machines, it's rare to hear people bearish on Canadian bank stocks (especially during the multi-year run they've been on of late) but there's an interesting contrarian view in the Toronto Star this week.

Consider that shares in all five major Canadian banks are worth less today than they were at the start of the year -- some by double-digits. When was the last time we were able to say that?

An eye-opening excerpt from the selected article:

David Tiley, who works with a team of value seekers at Mackenzie Cundill Investment Management in Vancouver, said this week “we don’t own Canadian banks, and have not for a couple of years.” “It’s related first and foremost to valuation,” said Tiley. “Earnings are closer to a peak than a trough, so you are taking a risk.

I always like analysis that throws "conventional wisdom" out the window. Food for thought.

(DISCLOSURE: I own shares of BMO)

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