Author Topic: "Canadian Banks are the Only Sector to Outperform Berkshire Last 25 Years"  (Read 13000 times)

alpha

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I came across this quote cited from a recent RBC report:

Quote
The Canadian banks are the only sector/subsector in North America to generate a better total return over the past 25 years than Berkshire Hathaway

https://twitter.com/alex_macdonald/status/837676416179318784

Does anyone have a copy of this report? What are your thoughts on investing in these bank stocks?


Liberty

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🤔 this reminds me of something...

Ah yes!

Quote
In the commission interview, [Mozilo] compared Countrywide with Berkshire Hathaway, the conglomerate run by the billionaire Warren E. Buffett. Mr. Mozilo told the panel that Countrywide’s stock had grown ‘‘25,000 percent over 25 years — a much better performance than Warren Buffett at Berkshire Hathaway. This is documented.’’

http://blogs.wsj.com/marketbeat/2011/02/17/mozilo-on-countrywide-better-performance-than-warren-buffett/
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LongHaul

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That's a great quote Liberty!
Mozilo had a better tan though.

EliG

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What are your thoughts on investing in these bank stocks?

Big 5 Canadian banks are a cozy, protected oligopoly. They are able to extract outsized rents from the Canadian economy, and their oligopoly isn't going away any time soon.

On the con side, they are quite expensive at present. But that is only a relatively minor consideration; the elephant in the room is the state of the Canadian real estate market. Read this thread for some insight:

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/garth-turner-greaterfool/

scorpioncapital

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So a simple group of banks outperform Berkshire over a pretty long 25 years? What's the point then of making buys at the right price and painstakingly putting together high quality businesses and re-allocating capital to better uses if our system/government rewards something as simple as a bank? Just curious if others don't see something upside down about this.


Cigarbutt

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Financialization and financial engineering are the issues. And it disturbs me too.
I know this too shall pass and that won't prevent me from eating my breakfast.
Banks are critical but the underlying business is pretty simple. Isn't it?
A lot of talking heads link this financial hypertrophy to income inequality and income stagnation. Makes sense.
The solutions proposed by the same though often only circumvent the issues. More regulations does not sound good.
I hope creative destruction infiltrates the network of financial intermediaries. Hopefully, the damage will be "contained".
Make the real world great again?

Ballinvarosig Investors

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Ireland's banking sector had about 25 years of similar out-performance before imploding and losing investors 99%-100% of their investment.

Uccmal

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What are your thoughts on investing in these bank stocks?

Big 5 Canadian banks are a cozy, protected oligopoly. They are able to extract outsized rents from the Canadian economy, and their oligopoly isn't going away any time soon.

On the con side, they are quite expensive at present. But that is only a relatively minor consideration; the elephant in the room is the state of the Canadian real estate market. Read this thread for some insight:

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/garth-turner-greaterfool/

This is the case.  They are also extremely well run in general, and conservatively run.  Right now they are expensive but they move in a trading range.  Around Christmas 2015 they could be bought at multiyear lows. 

Ireland's banking sector had about 25 years of similar out-performance before imploding and losing investors 99%-100% of their investment.

And this proves what exactly?  Have you ever tried to get a loan or a mortgage from the big 5,6, 7 Cdn. banks?  They are pretty rigourous. 


GARP tending toward value

SharperDingaan

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The green bank has cultural governance issues that are only beginning to surface. Their attitude also isn't going to be tolerated, and they will be made an example of. Most would expect some high level departures in the next little while, and some further declines.

SD   

CorpRaider

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Ireland's banking sector had about 25 years of similar out-performance before imploding and losing investors 99%-100% of their investment.

I see a repeat to the north.