You're ignoring commercial real estate.

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The difference is if I think the stock market is overvalued I can short sell (or implement an equivalent option strategy) and make a bundle if I'm right.

I can also sell off my stock holdings in any amounts I like if I feel they are getting overpriced.

You can't do that with RE. If stupid people are willing to pay too much, there is nothing smart people can do but wait for prices to fall.

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"And I really don’t care what a magazine survey says, I care what the market says, and BMO for example has recently traded at twice its low of $25 earlier this year. All the banks have also had sold-out issues of new preferreds in the last few months. This is money talking.

"

Good point but some bulls will point out that thet don't care what we say but what the market says about real estate.

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Thats fine, nobody knows either. Don't beat yourself on this, just try not to bet on particular outcome.

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The only way to determine the true strength of Canadian banks is to see what would happen if a sizeable percentage of their RE loans (not insured by CMHC) defaulted.

No, that's the true strengh of the RE market, not the banks. Making a government insured loan is a no-lose proposition for the banks, and the risky loans are almost all insured. The banks aren't stupid (well CIBC is stupid, but they are prevented from making stupid loans on Canadian RE). The taxpayers are holding the bag, not them.

Any sensible person should be up at arms at our "Conservative" government for allowing this idiocy to go on, in the face of the consequences seen south of the border. Getting rid of the 0/40 (which they instituted in the first place) is just window dressing.

And I really don't care what a magazine survey says, I care what the market says, and BMO for example has recently traded at twice its low of $25 earlier this year. All the banks have also had sold-out issues of new preferreds in the last few months. This is money talking.

And yes I am a bank shareholder, although I have taken some profits lately.

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This is particularly scary considering variable rate mortgages (on average) were around 5.60% waaaayyy back in good ol' November of '07!

I keep hearing a lot about deflation, inflation, hyperinflation and stagflation… each with its own impact on interest rates. I don't have a clue what to expect anymore.

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