RE:RE:Lots of people got burnt catching this falling knifeFor the most part, the shorts have one thesis now. It is that the housing market is going to crash. Might happen, but this bank has an LTV of 60% on uninsured mortgages. If the average LTV was 90% yes maybe the thesis had merit. People have to be forced to sell or default. Since the Canadian economy is doing well enough now, that is a tough proposition. So mainly speculation is pushing the shorts.
From my experience doing risk management, the average brain is very bad at judging probability and effect. Most don't know the difference between the two. For example, the scenario has a high probability that a 30% aggregate decline in housing prices will occur could have a 100% chance of happening, but the net effect would be neutral on HCG book value or earnings due to the low LTV. Most shorts are thinking the probability is high so therefore the effect is high.
The hardest part of investing is training your brain that low stock prices are good until you stop working or want to live off your investments. If you are a net buyer and don't margin, these prices are wonderful.