Tag: investing philosophy

Jake · Mar 22, 2026 8:22 am

The Canadian stock market has had a pretty good two years after being “dead money.” It was a very poor investment for a couple of decades. But, in my opinion, this has been driven by the financial sector, a paper shuffle. And then there is the real estate sector. Another paper shuffle. But you need to dig a little deeper.

As of early 2026, the financial sector, dominated by Canada’s “Big Six” banks, accounts for approximately 33%-33.2% of the S&P/TSX Composite Index’s market capitalization.

Bank Domination: The “Big Five” (RBC, TD, BMO, Scotiabank, CIBC), along with National Bank, command 86.3% of the Canadian banking sector’s market share, making them the primary drivers of this percentage.

Key Data Points for 2026:

Top Constituents: Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD) consistently rank as the top two largest companies by market cap on the entire TSX.

While the financial sector is the largest, it is closely followed by energy and materials, with banks serving as the primary anchor for the Canadian market’s high concentration in financials

Services, including the massive real estate sector, constitute over 70% of Canada’s GDP. Real estate, rental, and leasing specifically represents a major portion, often cited at around 13% to 14% of the national GDP, acting as the largest single industrial contributor to the Canadian economy.

Key details regarding the services and real estate sector:

Total Services Sector: The broader services sector, which includes professional services, healthcare, finance, and real estate, accounts for roughly 70% of GDP.

Real Estate Focus: The “real estate, rental, and leasing” industry is the largest contributor to Canada’s GDP, accounting for 13.2%.

Provincial Dependence: Some provinces are highly reliant on real estate, with British Columbia experiencing up to 1 in 5 GDP dollars (19.6%) generated by the sector.

Broad Definition: The real estate sector’s high percentage includes the “imputed” rent of owner-occupied homes, not just commissions and leasing fees.

Underground Activity: Real estate and related financial services are also key players in the underground economy, representing 15.3% of that activity.

This is indicative of the fact that Canada has no real economy. If you add in a few tech companies and a couple of pipelines, there’s not much out there for a long-term investor. And then there is the real estate sector, which adds no real wealth; it’s just playing with yourself to create fake value.

This would also explain the growing income inequality and the loss of productivity (failure to invest in anything except paper assets). Over the last decade (roughly 2015–2025), Canada has experienced a significant, structural slowdown in business investment in capital assets, leading to a widening productivity gap with the U.S. While non-residential capital stock grew by only 10.9% in real terms over the decade, investment per worker has stagnated or declined, particularly in machinery, equipment, and non-residential structures. 

In my opinion, this is the explanation for the rather anemic performance of the Canadian stock market in decades gone by. It likely does not bode well for the future. What will happen to Canada? I don’t know, but I wish I had acted on this a long-time ago. Poor retirement planning on my part, and not enough due diligence.

Will an investment advisor help here? I’m not sure. There are no easy answers. But can you really rely on someone who has a superficial knowledge of these matters to guide you long-term? To have an understanding of what’s going on in the long-term? I think not. You need to do a lot of due diligence to find someone to be your investment advisor.

#Canadian stock market#investing#investing Canada#investing philosophy#investment strategy#investments
Jake · Mar 20, 2026 7:45 pm

I am currently residing in Canada. I have lived here, except for a few short breaks, for over 65 years. I must say that as the years go by, I become increasingly disillusioned with Canada. I’m not sure what the attraction is for immigrants (other than they can’t get into the United States). Nosebleed prices for everything, incredibly high taxes with a government that is never satisfied with its “take”. It’s never enough.

During the last few years, there have been a lot of winners in the stock market, AI, and metals. The manufacturing sector is nonexistent. Governments have stifled the growth of the natural resource sector. Canadians are pretty much asleep, living off I don’t know what.

One of the main drivers of the Canadian economy is the real estate sector. Now that’s in crisis, and there is not much else out there. Maybe some tech will save the country, but ride a subway in Toronto at 2 PM in the afternoon and you will see the Canadian work ethic.

Today, Canadian stock markets took a huge dive. You would think that a resource-rich country like Canada would benefit from the turmoil in the Middle East. No. A more massive drop than New York.

Canadian stock market returns look good over the last five years. It’s because of the last couple of years. For decades, Canada was dead money. I believe that inevitably it will revert to that.

There are some good utility stocks, pipelines and maybe some tech. The rest is a real stinker. Look before you leap, and if you’re outside Canada, remember the currency risk that you are taking on board. Canada has not been a great place to put your money.

#investing#investing in Canada#investing philosophy#investment philosophy#investment strategy#investments#portfolio strategy
Jake · Mar 20, 2026 11:24 am

Stock markets opened with a whimper today. It appears that markets are still feeling the pressure of the Middle East conflict. Gold prices continue to fall. I suspect there was a lot of profit-taking going on after the pretty fast run-up in the price. It would seem that gold continues to have a place in long-term portfolios, but no one is talking about gold now. Buy when others are selling, sell when others are buying if you are interested in accumulating a position.

Gold shows you how volatile things can get. It dropped $1,000 an ounce in a pretty short period of time. There are no safe havens anymore, just pain or less pain.

Once again, I am displaying a trading mentality. Looking for the short-term profits. But I must always remind myself that I have maybe 10-15 years left to go. I cannot withstand long-term drawdown periods. So, keeping that in mind would seem to indicate that gold does not fit.

Long-term Canadian stocks worry me, so I look to utilities that have stable revenues and growing dividends.

#investing#investing philosophy#investment philosophy#investment strategy#investments#portfolio strategy
Jake · Mar 20, 2026 7:48 am

As a general matter, building your wealth requires vigilance. Even when you get the assistance of a financial advisor, you need to keep an eye on what’s going on. Relying totally on someone else to manage your wealth is, one might say, a little risky.

I paid lip service to creating an investment policy statement. It seems unnecessary. It’s not. It provides an overall framework for your future investments. It prompts you to consider where you will allocate your money and how your investment goals will change over time. It’s a mistake not to take it seriously, as I did.

There are many online resources available for crafting an investment policy statement. Do it! Don’t consider it as another unnecessary step. Don’t outsource this as well. Make sure it gets done, and that you are the originator of the document, not just filling in the blanks.

This is a short post. But I cannot overemphasize how important it is to go through the process, even if you are managing your own investments.

hard cash on a briefcase
Photo by Pixabay on Pexels.com

#investing#investing philosophy#investment policy statements#investment strategy#investments#portfolio strategy
Jake · Mar 19, 2026 5:10 pm

The markets closed today without doing any more significant damage to my money. I’m not sure whether the buying has come back, but for now it seems to have settled down, waiting presumably for some news from the Middle East. Canadian oil and gas stocks moved up in what is likely a dead cat bounce. I don’t believe that Trump is in a very strong position to allow long-term damage to the global oil supply with the mid-term elections coming up.

I get the feeling that this war with Iran will be yet another episode of unfinished business. This in turn, will inevitably bring more volatility to the markets in days and maybe years to come.

Canadian stock markets were down today, except for oil and gas. Canada is, in my opinion, a mess. And the outsized gains over the last two years have been the result of an upswing in base and precious metals. This was driven by the crazy AI stuff, which seems to have suddenly disappeared! No one is talking AI!

In closing off for today, there are a couple of points that I need to get into my head. As a 74-year-old man, I need to concern myself with capital preservation. I need to get the volatility out of my portfolio!

#AI stocks#investing#investing philosophy#investment accounts Canada#investment strategy#investments#portfolio strategy
Jake · Mar 19, 2026 10:58 am

The markets opened weak again today. The excuse or rationale was short-term oil prices. Yet again, the short-term and program traders are in action, tanking the market. It has now become the wild west. For simple investors such as myself, it’s difficult to distance ourselves from the noise. There is so much material on the internet, much of which is disinformation or misinformation. Unfortunately, it seems that everyone is an expert now, as they have a megaphone readily available to them. I just don’t understand how they all manage to support themselves. The most important thing to do in times of market turmoil is to turn it off.

The sad reality is that the action in the Middle East will not come to any decisive conclusion. And we will all have to live with the ambiguity that it creates. There will, in my opinion, be no short-term pain for long-term gain. It will just continue to be like a dull toothache.

As for me, when the dust settles, I will look to take the volatility out of my portfolio. I don’t like these 20% drops in stock prices in a two month period. I don’t know what’s going on in the background, but things seem to be wildly out of control. Time to reflect on my investment objectives and realign myself to face the reeality of my mortality. Hope is not a strategy.

#investing#investing philosophy#investment philosophy#investment strategy#portfolio strategy
Jake · Jan 26, 2026 3:00 pm

Looking at some of my investments, one issue came up. I noticed that stocks like Mastercard, Microsoft and others are all between 15 and 20 per cent off their highs for the last twelve months, as the S&P 500 and the Dow attain new all-time highs. I’m not sure what’s going on, but it seems some large-cap stocks are driving the market while others are left behind. Probably the usual suspects, like Alphabet and Nvidia, to name a couple.

This is disturbing when investing new money in the market. Obviously, the market has rotated out of the past leadership, not that this is news to anyone but me. But if you are looking to invest, it may be flashing some danger signals in this divergence between the “old” stocks and the “new stocks.”

I’m not advocating that anyone try to time the market. I have, however, been looking at swapping out my individual stocks for ETFs. And it makes me nervous, given my age and where I am in overall market strategy.

Bears make money, bulls make money, but pigs get slaughtered is the old saying. But right now it’s a bit tricky for me to make a decision on what to buy and what to avoid. It’s the same old story; most of us, I believe, are “pigs” when it comes to stock markets. I feel like I’ve been slaughtered a few times!

#investing#investing philosophy#investment philosophy#investment strategy#investments#portfolio strategy
Jake · Jan 16, 2026 8:35 pm

I’m listening to a podcast called the Loonie Hour. The current episode discusses Venezuela and the rationale for US activities there. It’s interesting. But at the end of the podcast, they rant about the future of Canada and the role it can play. None of these guys plays the long game. It’s all about the short-term impacts of events on the markets. The reason I am mentioning this is how it relates to personal financial planning.

You would think that Canada is now poised to become a great power because of its vast natural resources. They talk about Venezuela and the billions and the years that it would take to rebuild their oil industry. But they gloss over the fact that the same rationale applies to Canada. Yes, Canada has abundant natural resources. No, Canada does not have the billions needed to develop them. The capital market isn’t big enough, and I don’t believe that the risk appetite is here for these kinds of ventures. Never mind the politics.

These guys seem to be thoughtful. But they are short-term focused and are too young to understand that, in the end, the long game is the important one. Sigh!

#investing#investing philosophy#investment philosophy#investment strategy#investments#portfolio strategy#the Loonie Hour
Jake · Jan 11, 2026 12:35 pm

Another aspect of registered savings plans in Canada (RRSPs, RRIFs and others), is their portability. What I am referring to here is what happens to these plans in the case where you might want to retire in a country other than Canada.

I have been researching the subject, and a couple of things have come up. First, it’s very difficult to get a clear answer on what happens when you emigrate from Canada. It seems that policies differ from bank to bank, perhaps to a great extent or maybe with minor differences.

What is clear is that in some cases, you will lose access to your portfolio online. What that means is that you will need to actually call in to do a foreign exchange transaction or move funds from your registered plans to your bank account.

As I mentioned above, your account may be coded sell only. So that means that your portfolio is frozen in time, and you cannot make any adjustments to your portfolio other than a sale. If you want to replace one stock with another, you cannot do so. You can only liquidate into cash. It makes traditional portfolio management impossible.

I did a search using AI on how one might manage a portfolio in this situation. It came up with this:

ETFs are generally a better choice than individual stocks for a portfolio that can only be liquidated and not replenished with new purchases, primarily due to diversification benefits and lower single-stock risk.

Why ETFs are Generally Better

Instant Diversification: An ETF is a basket of many underlying securities (often dozens or hundreds). This structure immediately diversifies your holdings across different companies and potentially sectors, which significantly reduces the impact of a poor performance from any single company within the fund.
Reduced Single-Stock Risk: Individual stocks carry idiosyncratic risk (risk specific to that single company), such as a product failure, a lawsuit, or poor management that could drastically drop the stock price. In a liquidation-only scenario, you can’t buy more shares to average down your cost basis or rebalance if one stock plummets. An ETF mitigates this risk by spreading it out.

Built-in Risk Management: With no ability to make new purchases or rebalance actively, the inherent diversification of an ETF acts as a protective shield against volatility. Your portfolio is more resilient to market shocks.

Liquidity and Trading: Most major ETFs are highly liquid and can be easily sold on exchanges, just like individual stocks, ensuring you can liquidate when needed.

Why Individual Stocks Are Riskier in This Scenario

Concentration Risk: If your portfolio only holds a few individual stocks, the failure of just one company could permanently impair a significant portion of your capital, with no way to recover that loss through future investments.

No Rebalancing Capability: In a normal portfolio, you would sell overperforming assets and buy underperforming ones to maintain your target allocation. A liquidation-only scenario prevents you from buying, making it impossible to rebalance. An ETF, while not rebalanced by you, is managed by the fund manager to track its underlying index or strategy, providing consistent exposure over time.

Conclusion

For a portfolio that cannot make new purchases, the priority shifts to capital preservation and risk mitigation. The diversification and risk-spreading properties of ETFs make them a superior and safer choice for maintaining value until liquidation.”

Seems like pretty good advice. I’m 74, it might just be good advice in general.

My point is that you need to be very careful before emigrating. You don’t want any surprises that you can’t manage. At the same time, I should add that some of the investment dealers will close your cash accounts, period. So if you have a portfolio of stocks in a non-registered account, you will, in some instances, be forced to liquidate them. It will not generate any additional tax because of the Canadian departure tax on emigration. But it will mean you will need to buy back your portfolio in your new country, and there may be impediments to doing so. This is really messy, and you need to be very careful.

Another matter is making sure you have a Power of Attorney in place so that you can have things done for you when you have left the country. In the absence of this, you may be forced to return to Canada to take care of this kind of stuff.

The same applies to your bank accounts. Check and double-check what happens.

One maddening aspect of this is the refusal of any of the banks to put anything in writing. No matter who I spoke to, nothing in writing on this topic. Maddening.

#investing#investing philosophy#investment accounts Canada#investment strategy#leaving Canada#portfolio strategy#registered plans Canada