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Feb 13, 2009 9:29 PM
Last Post By: jcarsey
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I would choose to invest in Canada vs USA
Posted:
Feb 5, 2009 2:41 PM
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Just to clarify, I am not bullish right now on stocks. I am more short than long Canada, but without question I am more comfortable investing in Canada and here is why.
REASON #1 -- THE CANADIAN MARKET IS LESS WACKY
On the days I watch the market, I observe both US and Canadian movements. Without question I can tell you that the movements in the north are more logical than movements in the south. For instance, in the USA often bad news on financials comes out overnight and then financials soar. This kind of thing doesn't seem to happen in Canada as often.
REASON #2 -- HEDGE FUNDS DON'T PLAY IN CANADA
I have a number of friends who work at investment banks and hedge funds. They have told me that the spreads aren't tight enough, and there isn't enough liquidity and volume to gamble in Canada. The USA is the home to all the craziest leveraged speculation and program trading, because it has the volume and the tight spreads to make it happen.
Here is a dramatic effect that I have personally observed. Just like Reason #1 above, sometimes there are stocks that have wild daily movements as part of a sector. But on the TSX (Canada) it's only the dual American listed stocks that have these movements. Other, single listed canadian stocks don't exhibit those movements. I will bet that if you plotted volatility versus single or dual listed stocks, you'd find much higher volatility in the dual listed stocks.
REASON #3 -- THE CANADIAN GOVERNMENT IS SOLVENT
Even if our dollar is weak temporarily, the nation is solvent and in the best financial shape of any western country. I work in bonds, and can barely find canadian government bonds when I need them in a portfolio. The nation does not aggressively issue debt.
Oh and the Canadian dollar has better long term prospects than the US dollar. Nobody is talking about a total CAD collapse, but in America it seems like a near certainty after the nationalization of Fannie, Freddie, and the failures of the Federal Reserve.
REASON #4 -- THE TSX IS TECHNICALLY STRONGER THAN THE DOW
The S&P 500 did not make a higher high in 2007 (versus 2000 peak) during that last rally. Also, the US market is right back down to its 2002 low, a total evaporation of the Greenspan rally.
The Canadian benchmark index made a higher high in 2008 (versus 2000 peak) by 36%. In contrast to the USA, the TSX is fully 45% higher than its 2002 low, so there has not been a total evaporation in the bear so far.
I'm just saying, technically Canada is stronger in the big picture. Higher highs and higher lows are a key technical factor to watch.
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 5, 2009 10:11 PM
in response to: jcarsey
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 6, 2009 11:56 AM
in response to: jcarsey
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Also, Lets not forget about the "Buy American" issue (which is causing quite a stirrup right now). Despite the global goodwill directed at President Obama, the American economic policies proved globally unpopular at the Davos summit in Switzerland, the New York Times reports (http://www.nytimes.com/2009/02/02/business/worldbusiness/02global.html?_r=3). Russia and China took the opportunity to lambaste the U.S. for a culture of “excess,” while America’s European allies expressed grave fears regarding the prospect of future protectionism. Meanwhile, the rest of the world came together to wonder how the new U.S. administration could pay for its raft of stimulus packages.
Via www.stockresearchportal.com
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 7, 2009 1:48 PM
in response to: leslie
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Before you put money into Canadian equities consider my 'tell' for the economy. The number of ships at anchor in Vancouver harbour has usually been 11 ( low of 7) in the past 15 years. Since late October that number shrank to 2 ships, then recovered around Christmas to about 6 ships.
Today there were only 3 ships.
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 8, 2009 7:20 PM
in response to: leslie
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"The number of ships at anchor in Vancouver harbour has usually been 11 ( low of 7) in the past 15 years. Since late October that number shrank to 2 ships, then recovered around Christmas to about 6 ships"
Remember the Vancouver truckers' strike that caused financial hardships to businesses? Some of those shipments may have been through other ports in the west shores or through Halifax in the east shore. After all, most of the goods may be for Ontario and Quebec. So you should count the ships in those ports too.
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 8, 2009 11:39 PM
in response to: jcarsey
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I tend to agree about preferring the Canadian market. However I've noticed lately that the Canadian market and dollar tend to outperform when the US is in an upswing. When the US is in a downswing we tend to do worse.
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 9, 2009 2:52 AM
in response to: leslie
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I've got my eye on one stock on the NASDAQ but beyond that, I'm sticking with the TSE, the Tehran Stock Exchange...it's about to explode
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 9, 2009 9:46 AM
in response to: jcarsey
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I'm not bullish on stocks either whether it be U.S. or Canada but the RGE Monitor reports (http://www.rgemonitor.com/)that U.S private companies reduced employment by 522,000 in January, following losses of 659,000 in December. The latest losses were almost equally divided between goods-producing industries and service industries, which lost 243,000 and 279,000, respectively. The Stock Research Portal Blog (http://www.stockresearchportalblog.com/2009/02/us-job-losses/) commented with, “I find the loss of service jobs particularly disconcerting and worrisome, since after 2000 U.S. service jobs have more than replaced lost jobs categorized by in the U.S. statistics as ‘manufacturing.’”
Via Stock Research Portal (http://www.stockresearchportal.com/index_lp.asp)
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 10, 2009 1:50 AM
in response to: timmy09
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Keep in mind a loss of 130,000 jobs in Canada equates to about 1.3 million lost jobs in the USA. At this point Canada is just playing catchup. I wouldn't be in any rush to buy.
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 11, 2009 8:35 PM
in response to: justise
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Thanks for this observation justise, I think those kind of observations do have plenty of value.
What you observe at the harbour probably very closely correlates with the Baltic Dry Index, a measure of global shipping trade (raw materials moved by sea). You can see charts using $BDI at stockcharts.com
The BDI fell off a cliff in September/October, reflecting nearly a total halt to global materials traffic. Many observers noted that a significant reason for a sudden halt in global shipping and trade is that traders can not trust the credit of their counter parties. In other words, you won't ship something because you can not be sure you will be paid. Even if their bank provides a letter of credit, because the bank is likely insolvent, the letter of credit means nothing. No trade without faith in finance.
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 12, 2009 11:15 PM
in response to: jcarsey
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jcarsey: The S&P 500 did not make a higher high in 2007 (versus 2000 peak) during that last rally.
I believe you're wrong on this. S&P500 high on May 30, 2000 was 1,530.23. The Oct. 9, 2007, high was 1,565.15.
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Re: I would choose to invest in Canada vs USA
Posted:
Feb 13, 2009 9:29 PM
in response to: aktien
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jcarsey: The S&P 500 did not make a higher high in 2007 (versus 2000 peak) during that last rally.
I believe you're wrong on this. S&P500 high on May 30, 2000 was 1,530.23. The Oct. 9, 2007, high was 1,565.15.
I'm seeing different figures on that 2000 high. Stockcharts and finance.yahoo.com both show S&P 500 highs of 1553 in March 2000.
You are right though that the S&P 500 did go slightly higher in 2007; but at 1565 vs 1553 we're talking about the index going only 0.77% higher ... I don't think you can reasonably call that a definitive higher high (unlike the TSX which was unquestionably a higher high).
More important is the technical long term chart. At the scale of years, that 0.77% increase becomes imperceptible and you're just looking at a chart of two humps where the American market basically struggles and eventually reaches its 2000 bubble highs, only to crash hard immediately after.
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