Podcast Transcript

At Option Genius, we believe that you deserve freedom, financial freedom, so that you have no more worries and more than enough money, time freedom, so that you could do what you want when you want to do it, and choice freedom to live your life on your terms. But the system and Wall Street are rigged against those little guys, so how do we fight back? Well, my friend, that’s what this podcast is all about. My name is Alan Sama, and this is the Option Genius Podcast. So, let’s go ahead and get into our main story of today, which is the underground. Could it be underground? The underground sector that is quietly kicking butt. I wonder, any guys listening want to take a guess what it is, what the sector is. Matt, how about you? You want to take a guess what the sector is, you already know, but I

already know,

but would you have ever thought this sector? No, I would not. Performing this well,

no.

Yes, I will give you a hint, for those of you guys are watching, it is not a US-based sector. So we have this sector here in the US, but they’re not doing as well. They are like some of the sector here is like at all-time highs, but when you look at the charts for this international group, you’re going to see that it’s so much smoother, so much nicer, so much just straight from the bottom straight to the top instead of upsy, downsy, you know, just nice, relaxed. It’s like, oh man, I could just, you know, yep. Mark’s asking if it’s the Koreans. No, it’s not Korean. It is actually Canadian, and it is the Canadian banking sector, so the Canadian banking sector, it is doing phenomenally well. Year to date returns, we have anywhere from 34% to 15% so that’s the lowest one, and that is, you know, S&P is up 10% so right now actually a little bit lower, because it’s down today. So all of these are beating nicely the S P, the Canadian banking stocks are doing really well because they have earnings resilience, they’re paying out greater dividends, so their dividends are increasing, they have really strong capital ratios, meaning that they, the amount of assets that they have compared to their liabilities, is very strong. They’re doing buybacks, and they are much stricter on their lending requirements than in the US. So, when the market turns and goes downwards, or, you know, we have the K-shaped economy, where we got the really rich, and then we got the people on the downside. They also have something similar to that, but when the market turns over, because their requirements are stricter to get a mortgage or whatnot, then they don’t lose as much, they don’t have as many defaults, they don’t have as much subprime mess, because they are just stricter, and Mark, he knows what we’re talking about, because he is from Canada. So, he says, “Yep, I’m from Canada. Our banks have done well with great dividends, or good dividends. Option volume on the USA exchange is low, but on the TSX it’s pretty decent. And so, if you look at some of these charts, and we’re going to go over, you know, what they are, the names, you’re going to see that over a year, I just did year to date, but a one year total return, the worst one is up 33% in a year, and the best one is up 81% in a year, which obviously is much better than the stock market, so it’s pretty, pretty extraordinary, and their earnings continue to grow, so last quarter fiscal quarter two stronger, according, they have a, they have a big six, so they have the big top six banks there. These are mature businesses, right? They’re not going to be upset with AI. They are basically a monopoly. It’s not easy to start a bank, especially, you know, you know, like in America, you know, you can might get a charter, and you might be able to start a small bank and grow, but in Canada it’s a lot harder, and there’s not as much population, so for you to get started and take market share from one of the big six, it’s extremely difficult. So they’re entrenched, you know, they, and they’re, they’re, they’re well run. EPS earnings per share is 21% on average over year over year on all of them, and their ratios look really, really strong. So, if you’re looking for dependable growth, especially if you’re worried about a recession, this is a great place to be. Right, if you like dividends and increasing dividends, this is a great place to be. If you like strong capital cushions, meaning that they have plenty of cash on the balance sheet to offset any losses, these guys are there, they have it, they make fees, and they’re also in trading, so not only are they making money from, you know, from the banking side, but they’re also making money from the trading side, and so, you know, if IPOs happen, right, SpaceX, I’m sure SpaceX gave shares to these banks as well, so they give them to the US banks, they probably also gave them to the Canadian banks, so okay, here, give them to your best clients and whatnot.

So they also have that in their favor, and with the other IPOs that are coming about, even in, you know, Mark, Mark’s excited about what’s going on with SpaceX and these IPOs, he’s just like all the other Canadians, so yeah, they see it, so the third driver is Canadian, and so I just mentioned they have personal banking, right? They have commercial banking, they have wealth management, they have insurance, capital markets, and non-interest revenue, which is half of their revenue, that’s only half. The other things are, you know trading and other

streams,

yeah, and so the consumer has not translated into a shock for the banks yet, you know, I mean, all the banks in the US also are doing well, not as well as these, but they’re doing well, because the consumer is somewhat strong, you know. Employment is still doing well, inflation is hurting, but I think with the energy coming down, you know, the oil prices coming down, I do believe that inflation might at least be where it is, and not go down.

Yeah, the oil is a bigger or

not, cannot keep going up, right? So, I mean, prices might stay flat or come down a little bit. I’ve already seen it at the pump. Pump prices have already come down, and that might help offset other things. Now, you know, when they go up, they go up a lot faster than when they come down. So, yeah, every bit helps, but we won’t see the prices come down in food and in delivery fees and all that stuff for a little bit, but hopefully eventually it will come down if the Iran stuff, you know, stays where it is, and we did, we did not mention that in the news, but yeah, we do have, you know, tired

of it. We’ve already been

fatigued too much. We have a moratorium, but it doesn’t mean there’s a peace. It doesn’t mean there’s a truce. They could start fighting again. Trump, even you know, threatened them again. Like, oh, if I don’t like you, said it again.

Hey, is the straighter hormone open or closed? That’s the only thing you need to know.

Supposedly, the ships are going through more than they were before,

supposedly,

but he’s like, you know, even today at the G meeting, he’s like, “Hey, if I don’t like the deal, I’m gonna start bombing again. It’s like, “Come on, man. He gives it to you now that he takes it away. It’s

precisely why we didn’t make it as one of our topics,

so all right, so you know the banks, Canadian banks, doing really well, you know, some of them up 70% 80% in a year. What could go wrong? What are the.. what’s the downsides? What’s the.. what’s the risks here? So one of them is valuation, you know, as a price or as something continues to go up in price, it becomes more and more valued, and so it becomes overvalued to some degree. You know, your RSI, you’re looking at those indicators, indicators are kind of pretty high up, they’re like, oh, this is overbought, this is overbought, this is overvalued, and so it’s not – they’re not value stocks anymore. I don’t think that makes that much of a difference, because if they’re going up and the economies are strong, or the mech, you know, the economics of the business are strong, there’s a good chance it keeps going up, and they keep making more money, which they have been, so I think they’re good there. Second risk is credit deterioration, you know, if unemployment picks up, if it goes up big, if people stop spending, if people are afraid to move or refinance or anything like that, delinquencies and stuff like that could get higher. If that happens, then yes, obviously that’s going to affect all the stocks. There’s that. There’s always macro uncertainty, right? So they’re not, because they’re Canadian, they are not as it’s a smaller market, so they don’t have as much capital to diversify, they are diversified, but they have their own. They have their own issues that American banks probably do not have, you know. They have their own ties to different countries. I do know that on, like, the western side of Canada, there’s a really large presence of Chinese and Asians and investors and whatnot. And so there’s that, and there’s oil in the middle, you know, Calgary, and the whole area there is big on oil and shale, and on the west, on the east side, then you have, you know, Toronto and the tech bubble, the tech stuff there, and all that stuff happening, so they’re mixed, but right now everything’s everything’s looking well for Canada, that’s why I’m thinking, you know, this is a good place to invest, right? And so some of these tickers, you want to look them up, they are Royal Bank of Canada, I believe it’s Ry. Let me just make sure Ry is Royal Bank of Canada, that one is 64% in a year, 20% up this year, and today it is making a 52 week high at two oh 2.9 Today there is Toronto Dominion Bank, TD, which everybody thought was TD Ameritrade,

same colors,

exactly. So TD is the symbol there, that one is up at one 19.64 also a 52 week high for that stock. Then we have Bank of Montreal BMO, that one is coming in at one 70.93 and I mean, if you guys can see this chart, you know it is smooth sailing. It has not touched the 200 day moving average in over a year, you know, I just see it going like this 1104, to 171 It’s just nice, smooth sailing. Then we got the Bank of Nova Scotia, Scotia, Scotia,

Nova Scotia,

Nova Scotia, and that one is B N S.

That’s where I grew up.

Yep, that one also doing the same, you know? I mean, they pay nice, you know. This is an $87 stock, paying a quarterly dividend of 80 cents, right? So, what is that? Times eight or point eight times four, $3.20 and divided by today’s price is 87 that’s a 3.6 dividend, 3.6 3.7% dividend, and that’s today, after it’s gone up considerably. So you know the dividend yield has come down because the price of the stock has gone up so much. Before, you, you had double dividend, the same dividend, the same amount, but the stock was in half, and so the yield was much better. Then you have CIBC, which is a big one that people know about here. Canadian Imperial Bank, CM, is the ticker symbol there. That one is not making a 52 week high, but it did at 117 Right now it’s at 113 and we also have the National Bank of Canada and a Equitable Bank, which is EQB Versa Bank VB and K, and then the last one, which hasn’t done as well so far. This one is only up 2% this year, Lauritian Bank of Canada LB, so probably we can skip that one. It’s not part of the big six. The big six are again Royal Bank of Canada, RY, Toronto Dominion, TD, Bank of Montreal, BMO, Bank of Nova Scotia, BNS, CIBC, CM, and Bank National Bank of Canada, which is NA. Out of these, I do think I like TD probably the best, and maybe CIBC. So, both of those are above 75% returns in one year and over 25% year to date. So, both of those doing pretty swell,

they take most of the market share, and they’re well capitalized. Yeah, you have these downturns, they can withstand it.

So they’re doing really well, and I would, you know, like, if you’re looking for something long term, I think these, these would be great. They’re good dividend payers, they, they match for what we’re looking for as a passive trading stock, and this is something that you can hold, right? This is a Warren Buffett type stock, like, oh, hey, this got a moat, you know, it has a moat,

it, it has only a couple, yeah,

there’s only a few, and they’re making money, and you know, you take a look at all the AI and all the, all the tech that’s coming, they can easily integrate that into their workflow and cut costs, so they can make even more money. So, that is, you know, I haven’t seen anything about them really doing that yet, but they are, they are implementing. Soon, I mean, you gotta, you gotta believe that they’re doing it, and you know, a lot of these Canadian companies are just, they’re just run better, you know, it’s not as big a deal as in the US about going up in price, like it’s not about the quarter to quarter, right, it’s not the quarter to quarter, hey, I want to just grow, grow, grow my stock price, because that’s how I get my bonus, but these Canadian companies are just run better, more

fundamental based.

Yeah, one of my favorites is not a bank, but CCJ, which is Chemeco, it’s also a Canadian company, it’s a nuclear company where they mine and they make reactors, and I was listening to the CEO do an interview, and I mean, this guy was like a real down-to-earth guy. He’s not, definitely not Wall Street, you know, definitely. I mean, he did learn on Wall Street, he did go and get trained, and whatnot, but he, he was just like, “Hey, you know, we’re really.. he didn’t even mention that they were worried about their shareholders, you know. He’s like, you know, we want to make sure we do right by our employees, we want to make sure that we have them a good place to work, that, you know, we take care of our people, you know, etc. etc. These are people that I’ve been with in the business for 40 years, except he didn’t even mention once that, oh, our, you know, we want to, we want to maximize shareholder value, and we want our stock price to all the up, and he wasn’t talking about that at all, you know. And so it was really refreshing when I heard that guy, and it was just really low level laying, like really, like you know, eighth grade language, you know, not not all the big words and all the trying to make himself look super smart, just a normal guy. So that’s really cool. There, Jim’s asking, “Hey, can you put those in the chat, please? So, Jim, what we’re going to do is, we’re going to put these in the Facebook group that we have. So, there should be a link. If not, it’s free option group.com You can go to the link, it’s the Option Traders Alliance Group on Facebook, and we’ll be putting all of those in there, so that they stay, you know, if you put them in the chat, then it’ll go away, and so we’ll, we’ll put them in there also. Matt mentioned all of the space ETFs, we’ll be putting a list of those in the group as well, so make sure that you are on there. Plus, we are heading into social media, so if you find us on social media, Matt’s on LinkedIn, so if you guys can connect with him, he’s, uh, he, his account has like no connections or very few connections, it is brand new

support.

Yeah, so if you can find him on Facebook and connect with him, that would be great. We are posting more on Facebook, we are posting more on Instagram, we’re posting more everywhere, like TikTok. We even got a TikTok channel now. I mean, we’re trying to get out there, so if you guys see us, you know, share some of our stuff, subscribe to the new channel, subscribe to this channel, and the new channel, and so you get a little bit everything. So we’re trying to increase the reach, trying to get more people to understand what passive trading is, and stuff like this, you know, like in one sentence we’re talking about SpaceX, and how that’s going crazy, but then the other sense, the whole show is about safe, boring dividend-paying bank stocks, you know, but they’re also killing it, like they’re they’re killing it, so you can make money

in the market, where you just have to look a little bit, and you can find them.

Yep, and I mean, any of these bank stocks, if you had gone in and you had bought them, or you had sold naked puts on them, and you know, maybe you got a few shares, and you’re selling covered calls on the way up, you’re doing really, really well, because these are these are stocks that are inching up slowly, but they’re not going up 4% a day, right? Even today, they’re like up, you know, like point 2% point 3% but they’re going higher, day, day, day, day, day

of how, who we are, right? So it’s, and you’re making it boring.

Yep, yep, that’s it. Okay, anything else you got?

I’m gonna enjoy the weekend,

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