June 6, 2024

On Thursday, the S&P 500 was about unchanged while Toronto as up 0.4%.

TFI International was up 3.4%.

lululemon was up 4.8% after its earnings release. It was unable to hang onto all the gains it had in after-hours trading yesterday. When companies release earnings the moves in after-hours trading reflect initial reactions and the reaction can often change the next day as analysts get a chance to actually analyse the results.

Costco was up another 1% after it released May same-store sales results which indicated an overall increase of 6.5%.

There seems to be some signs of “excesses” in the market.

The action in GameStop shares is an example. Those shares were up 47% today with a reported 187 million shares trading hands. That 187 million shares is a very significant portion of the 351 million shares outstanding and an even higher percent of the 272 million shares that are considered to be part of the “float”. The market cap is $11 billion dollars. There will be some big winners and losers in this trade as the price is extremely likely to decline by huge amounts at some point.

The price increases of Nvidia may or may not be justified but do indicate a lot of faith.

In general the markets are at record highs and investors feel good. At some point we will surely have another significant “correction”. Therefore it is probably a good idea to have some cash available in case bargains do emerge. (I mean, there are “little” things like the very real possibility that Americans will elect a convicted felon, who also faces massive judgments of about a half billion dollars and who is known to be extremely vindictive and who will be highly motivated to interfere in the justice system.)

My next update will be for Royal Bank. Readings annual report I am once again gobsmacked by its enormous profitability (28% ROE) on its personal and commercial lending which represents just over half its business. The overall ROE is strong at 14.2%. The 28% is probably somewhat exaggerated because it is supported by a large corporate support group that has an ROE of negative 4%. Still, the personal and commercial business appears to have an ROE of at least 20% even if corporate equity were allocated to it. I will be taking a look at what percent of its mortgages are uninsured.

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