JanuarY’S early comments

January 3, 2022 – The US markets were open today and the S&P 500 rose 0.6% to set another all-time high. Apple was up 2.5%, Visa was up 2.1% Toll Brothers was down 3.0%. I understand this was due to higher yields on U.S. bonds that caused the real estate sector to falter. Houses in the U.S. are still quite affordable so a modest rise in interest rates may not affect Toll Brothers. But it does seem to be a stock that investors sometimes push down in price at the slightest sign of trouble.

There was news today that Joe Biden thinks that there are too many sectors in the U.S. dominated by just a few companies. He thinks there is a lack of competition. I would say he is exactly right. The profit levels of may large U.S. firms suggest a lack of competition. Many sectors are benefiting from what Warren Buffett calls “Survival of the Fattest”. The dominant companies keep becoming ever more dominant. For some reason regulators seem to approve just about every merger ever proposed.

I am taking a look at RBC now. Every year it is stunning to see how profitable their personal and commercial banking sector is. The ROE has averaged about 30% in that sector for years. That is massive. Overall they do about 16% ROE as some parts of banking are not as lucrative as personal and commercial.

January 3, 2022  – 2:15 pm eastern: In the table below, I have removed companies that are too far out of date. Some of these I will add back later in the year. The next update will be for Royal Bank. I thinks it’s a definite Buy. It trades at 2.1 times book value and has a history of achieving a 16% return on equity. The P/E ratio is attractive at 12.

January 1, 2022 – So, the 2021 trading year is done and in the books now with the S&P 500 up an astounding 26.7% and Toronto up 21.3%. The 25 stocks rated (lower) Buy or higher on this site at the start of 2021 have risen an average of 29.5%.

Scroll to Top