Canadian banks have done tremendously well over the last 10 years. The regulators are doing a great job of making sure the industry is safe. Everyone should own banks. There has not been any big write-downs in the banks recently. They are firing on all cylinders. Don’t overpay for them. BNS-T has international exposures to commodities, which has held them back a bit.
(Top Pick Feb 24/17, Up 1.75%) He is not too concerned about the auto sales in the US pulling back a bit. This is normalization. They continue doing a great job and can make accretive acquisitions. He remains a buyer at these levels. They pay a healthy dividend yield that could potentially increase going forward.
They are doing a pretty good job of consolidating the auto dealer industry. They were hit because a lot of them were in Alberta, but they are now going in the right direction. It is a question of time until the stock price recovers, but he does not think it will hit its previous highs. Be prepared to hold it for a while.
Markets. He is surprised by how low the volatility is on the VIX. These levels cannot continue going forward. Investors have to be careful going forward. Some caution is warranted. You have to pick your points and not invest in the overall market. There has been a lot of takeout activity and this is a sign of a toppy market. It does not mean we have reached the top, however. The gap between bonds and dividends has narrowed. Now you take on more risk as you deploy capital in the equity market for dividends. His fund has a negative view on commodities and he tries to stay away from them.