Q: What is your current view of Canadian Banks in general...seems like a decent time to add, or are you still overly concerned about rising rates and the threat of recession?
5i Research Answer:
Banks have been weak on more concern on rates as well as economic fears. While certainly no bank is risk free, the current valuation of banks is quite low by historical standards. We do think they will recover, and over time could do quite well. Sentiment is very negative, but the fundamentals are better than sentiment. There is always threat of recession, but (i) investors have been awaiting a recession for two years now, and (ii) we think one is largely priced in. We would be happy owning 10% or so of a portfolio in banks and slowly accumulating more over time.
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