If the only measure of a government was how our stocks are performing, then would just all vote for an index fund or a corporation as our leader.
But of course it's more than that.
Ie - does the leader have any integrity?
Is the leader/party in power actually doing anything for the people? Or are they slashing our programs and services?
Are they stepping on our basic rights/curtailing our freedoms?
Do they care about retaining good paying jobs in this country?
Do they even CARE about this country and its people?
Do they treat all people from each region of the country equally?
Or do they just see their mandate as a grab bag for their friends, cronies and special interest groups?
Anyways, something to think about.
I'm sorry to those that intend to vote for the NDP in October. People have their reasons for voting for whatever party they wish. Maybe there are planks or their platform you think will be beneficial to the nation. But, I work in the financial services industry. My job is to make sure your money is working for you. Unfortunately, an NDP victory will make my job more difficult.
The bulk of the TSX is made of financials/banking and resource companies. Financials and energy together account for almost 60 per cent, and important sectors such as health care, tech and consumer staples are under 5 per cent. The NDP has an ideological bias against resource extraction even though that has made Canada the envy of the world. There was a negative market reaction to the NDP victory in Alberta. There will be an even bigger and longer one if the NDP wins federally in October. It doesn't help that September and October are the most volatile months for the markets.
1. If you are among the millions of Canadians who has TFSA, you know it must be invested in Canadian companies. However, there are so many ways around that. If you purchase it through your Canadian bank and they put Apple shares in your portfolio that counts as Canadian content.
2. Take as little risk as possible. I have a client that has a conservative growth mutual fund that he bought in September that has earned over 2% since then. It is only 30% Canadian content. The US market being much more diverse than any other in the world helps insulate Canadian investors from a slide in resources.
3. Bonds are a safer bet. Bonds are debt as opposed to stocks which are equity. You don't share in the profits, but you get your principal plus interest. There has been a divestment from Canadian bonds recently, but it was entirely due to provinces. Although rates are low, they are a hedge against the stock market declines.
4. If you buy bank stocks do it before earnings reports come out.
5.Obviously avoid index funds. There is an ETF called Vanguard FTSE Canada All Cap Index ETF (VCN). Exposure to smaller stocks adds to volatility, but also offers the potential for higher returns than a portfolio focused only on blue chips.
6. Sector Diversification--Canadian dividend funds are laced with bank stocks. If you own one of them and a Canadian equity fund, you’ve maxed out on financials. I'm not being bearish on bank stocks, it's just a reminder to diversify sensibly. Canadian banks have delivered great returns over the long term though.
7. Don't gamble--double-up or double-down ETF that happens to be moving are RISKY. This gambling, not prudent investing.
We will get through this, but the markets do not like the unknown. An NDP government is a big unknown. Investing in Canada under such a scenario will require greater knowledge than in the past.