Hey there. Yield is largely irrelevant to me, as I am to achieve the highest potential total returns.
In regards to National, here was my commentary:
For practically my entire investing career, I have deployed a mean reversion strategy with the Canadian banks. This means I buy the worst performing Canadian bank, with the strategy that they will eventually revert back to their historical valuations, often leading to them being one of the better performing banks over the next year. This is also a strategy we utilized heavily on our Bull Lists at Premium.
This has been a strategy that has worked relatively consistently since the financial crisis. Since 2007, a mean reversion strategy with the banks has outperformed an equal weight strategy (utilizing Solactive’s mean reversion bank index versus their equal weight index) by about 1.8% annually.
To give you an idea of this in actual dollar amounts, $10,000 in the mean reversion index in 2007 would be $56,300 today, while an equal weight approach would be $42,606.
The difficulty is this strategy hasn’t worked out all that well since 2021. In addition to this, I’ve been attempting to reduce the overall positions in my portfolio and consolidate a bit, and this was arguably the easiest thing to do for that.
I now have a combination of Equitable Bank, Royal Bank, and National Bank, all relatively equal weight positions, for my banking exposure here in Canada.