Investment Q&A

A large percentage of banks' mortgages are insured, which helps in a downturn. But certainly all have some exposure and loan losses could increase in a downturn. But Canadian banks are in good financial shape with generally excess capital.  If we get a 2008 scenario then bank stocks are going to go down, perhaps a lot. But in 2008 homeowners were walking away from their negative-equity houses, because they were losing their jobs. Today, the employment scenario is the exact opposite, with record employment. Most mortgage holders will keep paying if they have a job. There are risks here, as always, but we are not too concerned about Canadian banks right now. Many increased their dividends this week, which is a small sign of confidence. They are still making gobs of cash flow and can handle a downturn.