Short Cdn Banks

I have been shorting Canadian Banks for three years, and I've been dead wrong! The rationale for my short position has been that interest rates will rise, the housing bubble will implode, mortgages will go sour, and the banks will get killed.

I am not alone in my concerns...see here...

https://www.youtube.com/watch?v=B1WhlQxTVlQ

And here...

https://www.youtube.com/watch?v=OkfpTEVIcM8

Basically, Canadian banks are not setting aside sufficient reserves for loan losses, and are booking that cash as profits instead. According to Eisman, in 2018, 90% of their profits came from NOT booking properly against risk. When they start to book more cash against risk, profits will drop, and share prices will fall.

In "short", this will not end well. 

Note - almost no one agrees with Eisman's thesis...like almost no one would admit there was a housing bubble in the USA in 2007...like almost no one would admit that high tech companies' share prices were overvalued in 1999. 

You get the picture.

I think the trigger for a major share price drop of all bank shares will be more restrictions on foreign buying of Canadian real estate, which has super-charged our housing bubble. 

When this happens, especially nationally, house prices will fall and banks will have to devote more cash to their reserves, forcing them to book less profit. Their shares will drop as a result.

Note that foreign buying restrictions have already started. In Vancouver, where foreign buying has been restricted by way of taxation and other methods, prices have already dropped 4% this year.

The way to play this is HFD on the TSX. It is a double inverse exchange traded fund on Canadian banks.

Do your own due diligence!