Sunday, July 7, 2013

Bye Bye Bank Stocks?

It’s rare that my professional and investing lives meet. Some might find this odd since I work in the financial industry, and analyze many public companies and banks as part of the daily duties. In order to avoid any conflicts of interest, I’ve never bought shares in a company I looked at for work. Given my work specialties have been in the forestry, automotive parts, and automotive manufacturing sectors, industries not exactly known for their steady dividend growth rates, it further explains why I wouldn’t be pulled toward the companies in these industries.

I’m very happy at my job, and the company I work for has treated me well. That said, I try to keep my eyes open for opportunities to expand my breadth and depth of knowledge of the financial industry in Canada. Recently, while interviewing for a job with another organization, one of the interviewers confirmed my hypothesis, that if I was the successful candidate, I would have to sell my shares in Canadian banks in order to avoid any actual and/or perceived conflicts of interest.

If you have followed this blog for long, or know my investing tendencies, you might guess that selling my holdings in Canadian banks wouldn’t be particularly easy for me. Quite simply, I think Canadian banks are profit machines that have a proven tendency to kick back a nice percentage of those profits to investors as dividends that grow over time. After opening my trading account in 2000, I bought 100 shares of Bank of Montreal as one of my first investments. My investing love-affair with Canadian banks has only grown over the years, with shares in these institutions accounting for approximately 25% of my current holdings.

Although the challenge of replacing such a large percentage of my portfolio with shares in other companies would be difficult, it’s something I think I could do if required. However, I’d also have to take a tax hit by selling bank shares in my unregistered trading account…and that’s something I’m much less inclined to do.

I decided to decline the organization’s request for a second interview, as I don’t think the job would be a good fit for me at this time in my career. The fact I’d have to sell my shares in Canadian banks definitely contributed to my decision. 

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