Here in the week of Canada Day, it just so happens that our client portfolios have more Canadian companies in them than they’ve had in over a decade.
Why?
First, because I like the approach that Canada is taking to the pandemic. Our leaders have been driven by science and medical evidence as opposed to politics. The result is a more stable economic environment north of the border, as the United States deals with a 90% increase in new COVID-19 cases over the past two weeks.
Dr. Anthony Fauci, the highly-respected director of America’s National Institute for Allergy and Infectious Diseases, said this week that 100,000 new US cases per day is a possibility. The US is currently at 50,000 per day (while Canada is at approximately 400), and there is reason to believe that Americans congregating and travelling on The Fourth of July weekend will spike the numbers even higher.
As for the impending number of US deaths, Dr. Fauci had these words: “It is going to be very disturbing, I can guarantee you that.”
Second, I’m buying Canadian because I think that the US market is significantly overvalued versus ours. A longtime pillar of our strategy is to own companies that consistently pay dividends and have strong balance sheets along with defensive business models. Relative to the United States, we are finding more of those companies in Canada right now.
Third is the rising confidence we are feeling in the domestic economy: Bloomberg reports that consumer confidence is up for the ninth straight week, buoyed by phased reopenings across the country.
I am optimistic that our portfolios will rise even further and continue to outperform the market, in part because dividend stocks – which as mentioned are central to our portfolios – are actually underperforming at this time. The market has not yet recognized their value. But interest rates are low, and we expect them to stay low for some time. When interest rates are low, bond yields fall, making dividend paying stocks a more attractive alternative – which the market will eventually recognize, causing their prices to move higher.
SUMMERTIME IS THE TIME
After such a long and difficult winter and spring, we are all feeling some relief that warm summer weather is finally here. For almost four months now, people have been very focused on the day-to-day: infection and death rates, keeping ourselves and our families safe, rapidly changing rules and regulations, the ups and downs in the market, and the overall economy.
But here in July, many of you will be spending more time with your families, perhaps at a summer property. Children and grandchildren may be with you. And so it is a natural time to take some deep breaths and think beyond the pandemic – to the future. It is a season to reflect about the things most important to us, including matters of intergenerational planning like wills and estate planning, beneficiaries, insurance coverage and your legacy. These are not just financial issues, but emotional ones as well. Ultimately, the further out we can plan, the more wealth we can create for you, and for those you care about the most.
If you, or anyone you know, would like us to join your contemplations, we will be here, along with the vast resources we have at our disposal here at RBC Dominion Securities: Canada’s largest team of top experts including accountants, tax specialists, estate planners, lawyers and others.
Happy Summer!
--
We don’t speak jargon. We’re all about uncomplicating your life, so we speak plain English. If there is someone you care about – someone who would appreciate this simple and straightforward approach – please feel free to share this message with them or put us in touch.
Want to discuss any aspect of this month’s blog, or any other issue on your mind? Have a story idea? I am always happy to receive your call or email.
Tyler Marche, MBA, CFP, FCSI
Your life, uncomplicated
tyler.marche@rbc.com
1-416-974-4810
www.tylermarche.com