December 12, 2016 (with an update for Royal Bank)

On Monday, the S&P 500 was down 0,1% and tronto was down 0.2% (despite a rise in oil prices)

CRH Medical was down 6.8% on Toronto. I am not aware of the reasons for the volatility.

CN Rail was down 2.3% apparently after some allegations against it regarding its freight charges – allegations which may be completely unfounded.

The report for Royal Bank has been updated and it is rated Buy at $90.30. I was almost very badly misled into thinking that the analyst forward P/E was 15.7 as shown on Yahoo Finance Canada. That seemed odd as it was a prediction that earnings would drop about 15% and I had not heard that this was expected. But I looked at the U.S. version and saw a forward P/E of 12 indicating a 13% growth in earnings per share. All in all, the numbers still justify a Buy rating on Royal bank shares. (In fact I probably could have said (higher) Buy) The forward P/E error was probably caused by dividing the U.S. earnings expectation in U.S. dollars into the Canadian dollar price. I still view Royal bank as potentially risky because of its high leverage. But other than trimming excess exposures to it, it is probably safe to hold. (But no stock is ever immune to significant declines.)

In my December 10 post I forgot that I has also sold another chunk of Wells Fargo. And today I sold some Bank of America. I have now reduced my investments in U.S. banks very substantially.

Wells Fargo has more bad news today when Prudential Insurance said it will not longer allow Wells Fargo to sell its products. The account-opening scandal could very well cause another plunge in Wells Fargo before it is done. At $55 and certainly at $57 Wells Fargo no longer looked like a bargain and with the scandal still hanging over it, it seemed wise to sell. My only hesitation was I held it in a taxable account. Since I seem to have gotten into a selling mood, I may just clear out the remainder that I have left.



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