Many Canadians are going out of their way to buy products made within our borders, even if they cost more, but what about our investment portfolios? I’m reporter Brenda Bouw, filling in for Scott Barlow, and today we’re looking at how the “Buy Canadian” momentum seems to stop when it comes to stocks. We’ll also revisit a 19th century poem Warren Buffett suggests investors read when markets go wild. If poetry isn’t your thing, a pro-Canadian, anti-tariff take on the 1978 Gloria Gaynor hit “I Will Survive” could be a welcome earworm.
A banner reading "Buy Canadian", in response to U.S. President Donald Trump's 25% tariffs on goods from Canada, is held aloft by a pair of hockey sticks in front of a house in Winnipeg.Ed White/Reuters
Portfolios
Buy Canadian stocks only?
Buying Canadian goods and services is relatively easy when it comes to groceries, personal care products, shoes and clothes – but it’s a lot more complicated with stocks.
For years, Canadians have been encouraged to avoid “home bias” in their portfolios, and the U.S. economy has been an obvious diversifier because of its size and scale. Even if an investor wanted to sell all of their U.S. holdings, a market correction isn’t the time to do it – unless you’re okay with losing thousands of dollars for patriotic purposes. (And don’t forget that many Canadian companies do business in the U.S., making any decision to shun U.S. holdings even more complicated).
The Globe’s Rob Carrick argues you’re hurting yourself when you avoid the U.S. market because you miss out on globally dominant companies in areas like technology and health care where the Canadian market is weak.
Many portfolio managers I asked this week have the same stance on owning U.S. stocks.
“I get that people are extremely unhappy with the Trump Administration right now. But make no mistake, the U.S. is home to the greatest companies in the world,” says Barry Schwartz, executive vice-president and chief investment officer at Toronto-based Baskin Wealth Management. “My goal is to own the best companies that will deliver the highest compound returns over the long-term. There’s just more of those names to pick from in the U.S.”
Jennifer Tozser, senior wealth advisor at National Bank Financial Wealth Management in Calgary, says she’s not avoiding U.S. stocks – nor are her clients asking for it.
“My job is not to exclusively invest in Canada; it’s to make money for Canadians,” she says. “The policies implemented during Trump’s presidency, particularly the ‘America First’ approach, created an environment where certain U.S. stocks were relatively isolated and could benefit from these policies. When making investment decisions, it’s crucial to consider these factors.”
Ms. Tozser also owns several Canadian stocks “not just because they’re Canadian but because they’re global leaders in their own right.”
Kevin Burkett, partner and portfolio manager at Victoria-based Burkett Asset Management Ltd., says his clients generally focus on performance and risk management rather than political concerns.
“While some clients express worries about political tensions, our role is to ensure they remain invested in a diversified, well-constructed portfolio,” he says. “We emphasize that U.S. markets continue to offer attractive opportunities in certain sectors and that making investment decisions based on political sentiment rather than fundamentals can be costly in the long run.”
Canada still an attractive place to invest
While the consensus is that it’s wise to own U.S. stocks, some investors believe Canada is a lot more attractive right now, despite the tariff impacts.
Newhaven Asset Management Inc. is one of the few Canadian asset managers without U.S. exposure in its portfolio before the recent bout of volatility, according to portfolio manager Rebecca Teltscher. She has viewed the U.S. market as too speculative for her liking in recent years, driven partly by the AI boom.
“So, we avoided the space entirely and instead focused on more reasonably priced stocks north of the border,” she says.
Ms. Teltscher believes there are good companies in the U.S. and might consider buying a few if multiples come back to reasonable levels.
“For now, we are extremely happy with our decision to focus on reasonably valued stable Canadian stocks,” she says, noting that more than half of the names have some form of U.S. or global revenue stream.
Stephen Takacsy, chief executive officer and chief investment officer at Montreal-based Lester Asset Management Inc., has also been more focused on Canadian stocks, even before the tariff turmoil, because he believes they’re better valued and some companies are being unfairly punished.
Mr. Takacsy suggests investors steer clear of certain U.S. companies aligned with Trump policies – citing Tesla Inc. TSLA-Q as an example – because he says their businesses are affected by the political fallout.
“Our mandate is to make attractive risk-adjusted returns for our investors, and the risks are definitely increasing for certain U.S. stocks,” Mr. Takacsy says, adding that many U.S. stocks are seeing their fundamentals deteriorate due to Trump’s policies.
“Some European investors are now even contemplating pulling money out of U.S. banks” he adds.
Singer Gloria Gaynor sings a rousing rendition of her song I Will Survive after receiving her Performing Arts award during the 10th Anniversary Induction Ceremony of the New Jersey Hall of Fame at the Paramount Theater in Convention Hall in Asbury Park, N.J., Sunday, May 6, 2018.Bob Karp/The Associated Press
Diversions
A fight song for Canada
In case you missed it – or even if you’ve seen it, it may be worth a relisten – here’s a little ditty that has been generating a lot of buzz this month: Gord Moran, a retired Ontario teacher, reportedly repurposed the 1978 Gloria Gaynor hit “I Will Survive” into a pro-Canadian, anti-tariff hit. The song, produced by Wayne McFaul and sung by Sonya Zaback, is an “earworm worth embracing,” according to this blog post. Here’s the YouTube version. (And here’s the original version).
Ancient words of wisdom
If you’re looking for more zen in these turbulent tariff times, a recent CNBC story reminds us of some advice Warren Buffett gave in a 2017 letter to shareholders, encouraging stressed out investors to heed a few lines from Rudyard Kipling’s poem If, written circa 1895.
“If you can keep your head when all about you are losing theirs . . .
If you can wait and not be tired by waiting . . .
If you can think – and not make thoughts your aim . . .
If you can trust yourself when all men doubt you...
Yours is the Earth and everything that’s in it.”
Sounds like good advice, but not sure Mr. Buffett would feel so laid back if he were a Canadian right now being threatened with U.S. annexation.
The essentials
Looking for our updates on market movers, analyst actions, stock technicals, insider trades and other daily, weekly and monthly insight? Click here to visit our Inside the Market page.
Globe Investor highlights
Tim Shufelt explains what the trade war and the early days of the pandemic have in common.
Brenda Bouw (shameless self-promotion) interviews money managers about whether it’s time to buy the market dip.
Rudy Mezzetta reports on why the Canada Revenue Agency is telling taxpayers with capital gains to delay filing their returns.
Sam Sivarajan writes on how Canadians can prepare their finances for potential price increases and added uncertainty.
Rob Carrick’s opinion piece about why money you need in the next five years should be pulled from the stock market.
What’s up next
There are a couple Canadian economic reports on Thursday: the national balance sheet and financial flow accounts for the fourth quarter and building permits for January. Also Thursday, look out for earnings from companies such as Empire Co. Ltd., NFI Group Inc., North West Co. Inc., Premium Brands Holdings Corp. and Wheaton Precious Metals Corp.
On Friday, the latest data arrive on Canada’s manufacturing sales and new orders, wholesale trade and new motor vehicle sales.
U.S. data coming out includes the latest Producer Price Index on Thursday and U.S. University of Michigan Consumer Sentiment Survey on Friday.
See our full economic and earnings calendar here (You can bookmark the page - it gets updated weekly)