World Ecomomic Form rates Canadian BanksWorld Economic Form gave Canadian Banks it's highest rating today 6.8 the Swiss were next! Got this off BNN today!
What have I been saying for weeks. Canadian Banks are a great buy here ...trading a few dollars over book or 3 to 4 times forward earnings.
To say Canadian Banks got over done is and understatement. period believe the doom and gloomers or look at the reality. Compared to the Worlds Banks Canadian Banks are in the best shape.
Even the big mouth Cramer on Mad Money sees the Dow only going to 8300.
Here is an excellent article to consider during this cycle of the market... Cheers
Is it time to sell your stocks?
Expecting further fallout from the credit crisis around the globe, investors are dumping stocks indiscriminately. Is this the right time to get out?
By Gordon Powers
October 08, 2008
Here we go again.
Shell-shocked investors, much more aware of market risk now than they were only a couple of months ago, are really starting to turn their backs on stocks. And they're doing so because the day-to-day fluctuations and overall volatility are simply driving them nuts.
Last month, rattled Canadians yanked a record $4.6-billion from mutual funds. It was the largest month for net outflows since the Investment Funds Institute of Canada began collecting data in 1990. Much of that money is going into low-risk GICs or high-interesting savings deposits, even though interest rates are fairly low and are expected to drop again soon.
What's worse, on Monday, European governments were scrambling to save several major banks and lenders, suggesting that the credit crisis is spreading around the world, taking stocks with it.
But despite this dramatic selloff, cautious investors should be focusing their attention elsewhere, argues York University Professor Moshe Milevsky, who maintains that risk should be framed and explained in terms of "the probability of regret."
Look at it this way. When you have a project to complete, you try to be realistic about how long it will take and what it will cost. And, if you're wise, you'll also map out a worst-case scenario along the way.
In other words, before heading for the hills in the face of this market downturn, take the time to calculate the odds of whether you'll actually end up ahead by locking in your losses and opting for a safe, risk-free solution like T-bills or GICs.
It all comes down to how long you plan to be around and how closely you monitor your affairs.
Historically, over a one-year time horizon, there's roughly a 35 per cent chance that a diversified portfolio of stocks will underperform the rate of return from a safe bank deposit, Milevsky reports.
In other words, if you're going to need the money twelve months from now, there's a 35 per cent chance that you'll regret taking the stock market route.
But what about 10 years out? In this case, the probability of a diversified portfolio of stocks producing a shortfall is closer to 11 per cent. Remember that we're not talking simply about a return of principal here; you're looking to beat the bank deposit, the risk-free investment alternative.
There actually is some truth to that "invest for the long term" mantra. As your investment time horizon increases, the probability of regret decreases exponentially, so much so that the probability of regret is close to a negligible 1 per cent. In other words, you're looking at a 99 per cent success rate -- if your time horizon is 30-odd years, which is less than most people's working lives.
But right now at least, thanks to the worst U.S. financial crisis in decades, most people are having trouble seeing much beyond next week. So, stop looking so closely.
As much as they should be, most of our financial decisions aren't based on where we're going to end up, but what's happening in the moment. Psychologists refer to this thought process as "narrow framing". Even if we're saving for retirement and therefore have a long investment horizon, it's today's headlines that always seem to grab our attention.
Narrow framing is hazardous to your wealth because it can lead you to actually overestimate the risk you're taking, especially when so many people have been discovering they're much more sensitive to losing money than they ever realized.
The narrower your frame, the more likely your brain is to register losses and prompt you to react. And, since individual stocks are more likely to sustain dramatic losses than a diversified portfolio, they tend to stick out like a sore thumb. Though fertilizer giant, Potash, one of the companies that helped power the Toronto market during the commodities boom, offers the best evidence, there are numerous other examples.
This myopic effect has been widely demonstrated in experiments. A few years ago, subjects were given the distribution of monthly returns on a stock portfolio, while others were shown only annual returns. Although the way data were presented shouldn't make any difference in decision making, those shown monthly returns were much less keen to invest in stocks.
The most plausible explanation for this is that on a monthly basis, stock setbacks are more frequent, spooking those who worry about potential losses. The message is that those of us who focus too much on day-to-day fluctuations will overestimate stock-market risk, allocating too little of our money to stocks and potentially coming up short in retirement.
Unless you've really been kidding yourself about your risk tolerance or are going to need the money a lot earlier than you'd planned on, this is not the time to bail out. Gradually reassess your asset allocation, by all means, but missing out on the higher returns that stocks offer could really cost you over the long term -- the only term that really matters.