Manulife clobbers XFN!
Ah, we were doing so well with XFN, outperforming the XLF, and the TSX until Manu decided to cut its dividend! Is this a sign of things to come in Cdn financials? What should we do? There might be a quick short rally Fri or Mon. Should we sell into that? I hate to be a short term trader but Manu has a history of being on the leading edge (or trendsetter) so this may portend other similar moves.
If we decide to take action, please go ahead with trade. I am currently in Europe with limited internet access after noon EST.
posted by Junk Bonds @ 8/07/2009 03:40:00 AM
3 Comments:
Cdn. banks sold off last year due to fear of the credit contraction not because of the credit cycle. What was unusual about this most recent 'great' recession in the US and canada was that the financials led the recession(or caused it!). Usually financials get hit later as loan losses rise due to the weakening economy. I think the Cdn economy weakness has not filtered through to the loan books of Cdn banks as yet and this has not been fully discounted in their share prices especially of the big five banks. I have read that BMO is also at risk of cutting its dividend but the markets have not priced this in as BMO has been outperforming its peers!
I've been cautious with the Cdn banks personally but have been amazed at how well XFN has done! It has underperformed US financials (XLF) but you can't mess with American style capitalism with FDIC guarantees, Fed bailouts, and TARP funds.
The markets have rallied 50% from its lows led by financials. How much risk are we willing to take by holding out for a few more percentage points? We've agreed in the past that this was a trader's market so I have no qualms with selling this now.
I can put an order as I am not in Europe or Cottage Country (I wish I was!!!). But do we have any plan what to do with the cash? What are other sectors that you expect to outperform financials?
I'm back from Europe so I can make trades too. :)
I was trying to figure what to do with the proceeds. maybe it's time for EEM while the market rallys??
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