Royal Bank (RY.TO)

The banks are very well positioned. Benefitting from GenAI and AI investments. Regulatory environment is in their favour with OSFI lowering threshold for risk-weighted assets, which means they have more capital to lend. Consumer is reasonably healthy. As long as interest rates don't go flying through the roof anytime soon, the banks can continue to do well.

Same business it was a year ago. Capital markets and asset management doing well, retail doing OK. But it's up ~70% in 12 months or so. Trading close to 3x book value, 10-year average is 2x. A bit excessive. He's been trimming Canadian banks. Still the best-quality bank in Canada.

Capital markets and wealth management businesses have driven the Canadian banks. They've benefited a lot as the stock market rises. THe underlying retail banking business is sluggish, but there's optimism here, because next year mortgage renewals will no longer be a headwind to the Canadian economy. The banks have endured with minimal loan losses. The PE of the Canadian banks is historically high, but they remain great options to own.

You can buy those calls back, and then roll up to $320 or so. If you buy back the near-term call, and then sell a longer-term call, chances are it won't cost you any money.

Absolutely don't sell a put to oblige yourself to buy more, not right now. You want to sell puts when the premium is really good. Premium here isn't good, as stock's been heading straight up.

Great quarter. Belle of the ball of the banks. Strength in Canadian lending in both personal and commercial. Less cyclical than before, as rough markets lead to more trading and helps diversify earnings profile.

Trading at 17x PE, whereas longer-term multiple is around 12x. Outlook for earnings growth is still very robust, but potential for re-rating downwards on the multiple. 

Trim a bit, just to buy something that's a bit more undervalued. If coming in fresh, wait for a more attractive entry point.

He's a bit wary on the sector, and questions the high valuation as well. Always traded at a premium -- stability, growth, strength in wealth management. But the premium has eroded, as they're all expensive now; that argues for holding onto this one. CEO stated that demand for credit and loans is staggering, which would support another leg up.

It doesn't matter which Canadian bank you bought 20-30 years ago; all offered double-digit returns with growing dividends. No question that their valuations are the highest in a long time, because they sailed through all worries (higher mortgages, a Toronto housing collapse didn't happen, tariffs, Iran war). Meanwhile, the banks have transformed more to fees and recurring revenue.

Today he's taking money off the table in the sector. Why? Valuation. Trading today at 2.6-2.7x forward book value, yet the business hasn't really changed all that much. In on the SpaceX IPO, which is like money from heaven.