Its sometimes a question: how does the performance of the Canadian stock market do under different political regimes? It’s not really something that should be guiding our investment choices. We should not be wishing for one party over another if the criteria are to get a better performance. It’s an often-repeated phrase: “correlation does not imply causation” and for sure it applies here.
Drawing investment conclusions from these figures would be an overreach. The seemingly stronger returns posted under Liberal governments owe more to economic cycles and global factors than to domestic policy. Consider the mid-2000s boom in commodity prices, which was a powerful tailwind for the resource-heavy S&P/TSX Composite. That rally was fueled by external demand factors, most notably a period of exceptionally rapid growth in China driven by outsized investments in real estate, infrastructure, and manufacturing.
As we approach another federal election, there are two takeaways.
- Will investors remain disciplined to their long-term objectives and resist the impulse to make significant portfolio adjustments based solely on political developments?
- It’s always prudent to focus on economic fundamentals, corporate profit trends and valuations, which are the more relevant drivers of stock market returns over the long term.
So of course, for clients that have short term needs for cash, or on-going cash requirements, we invest accordingly so that your cash needs aren’t being affected by the vagaries of the ups and downs of the day, or headlines. It’s always a balance between those long-term needs for growth, with the invariable ups and downs, versus the needs that we identify for each of you for adequate amounts of money available that don’t fluctuate with the market.
We continue to field tax-queries and generate reports or duplicates of anything you require.
Kind of interesting timing, with all the US and Canada issues, and shows of patriotism showing up. Fans of Micheal Bublé will be delighted to know that he is hosting this year’s Juno’s on Sunday, which is Canada’s version of the Grammys, recognizing achievements in the music industry. I had to look it up, but I’m going with the Weeknd winning single of the year for his song “Timeless”.
Have a great Weeknd: haha!