We all know that Canadians are up in arms (well, elbows are up to be more specific) over President Trump’s strategy to destroy Canada, economically. There is a national wave of pride that says ‘Buy Canadian’ and avoid most anything produced in the U.S. More Canadians refuse to cross the border as well, tourism to the U.S. is down significantly. And while U.S. produce rots on the shelves at No Frills, many Canadian investors are also dumping their U.S. stocks in protest. This is the financial equivalent to cutting of your nose to spite your face. Don’t avoid U.S. stocks. Embrace a global portfolio.
Now I certainly understand, here’s the kind of motivation that gets our elbows up …
Of course Canadians will take a pass on that 51st State offer. But we should not take a pass on U.S. stocks. While you may not be a fan of the United States of America, it is still where they keep most of the best companies on earth. It is where they keep the best stock market on the planet. It’s where the entrepreneurial spirit and innovation rages like no place on earth.
Good luck hanging out in Rogers
Ironcially, the best way to protect against economic attack might be embracing our attacker. At least in a portfolio sense. What if they win? What if they destroy Canada economically? They can. Trump might. The U.S. would get stronger as we get weaker. Good luck hanging out in Rogers, Bell, BMO, CIBC, Enbridge, Magna and Suncor. Remember, America doesn’t need anything that Canada produces 😉
A portfolio can be used to hedge most economic events in life, even our country’s economic demise. I suggest that you protect yourself and your family first. Don’t remove what might be your best line of defence. If the U.S. remained an economic powerhouse (with U.S. companies leading the way), and the Canadian stock market and Canadian dollar collpased, owning these great U.S. companies would make you rich in your own land. And in grotesque fashion, the greater the divide the richer you would get in your own land by way of those U.S. holdings. Here’s the U.S. market going up 4-fold from 2013 with the added currency boost. The weaker the Canadian Dollar, the greater your return.
Warren Buffett does not hate you
Keep in mind that the C.E.O.’s and management at Berkshire Hathaway, Pepsi, Microsoft, Home Depot, Johnson & Johnson and Apple are not out to get you. Quite the opposite, they know a massive tariff war is a very, very, very bad idea for everyone.
In fact, Warren Buffett slams Donald Trump’s tariffs on Canada and Mexico and calls them an act of war. Most business leaders don’t like what’s going on, and it’s the same for so many, or most Americans …
And in Vermont …
The fact that a tariff war is a bad idea might be reason for optimism. For Seeking Alpha this week I offered Defensive stocks for unpredictable Trump policy.
From that article.
My take on the global tariff war concept is …
The bad news is a global tariff war spells economic destruction.
The good news is a global tariff war spells economic destruction.
Essentially, it can’t happen, I think and hope. The markets will push back and so will voters if the economy continues to weaken, and we see a spike in inflation.
It’s safe to say that Trump does not want to be a half-term President, again. They have mid-term elections in 2026.
But U.S. stocks are underperforming
Yes, you might have noticed. And I’ve been pointing this out to readers for several weeks. The markets have been turning their back on U.S. stocks and are embracing international equities.
The reasons are likely two-fold. The U.S. market is terribly expensive, and market makers are certainly nervous about the global economic and political rewiring that is taking shape. Europeans, Canadians and many others are looking to stick together in case this global tariff attack becomes a ‘real thing’ beyond rhetoric and threats.
When you put together a global ETF portfolio, you might choose to equal weight U.S., International and Canadian equities. I also like the idea of gold in the balanced portfolio as I’ve put forth from the beginning of this blog. I’m a big fan of layering in a value tilt for U.S. stocks as well.
As a semi-retiree I also like U.S. defensive stocks as you’ll see in this Sunday Reads from two weeks ago.
The stock market is not the economy.
That goes for Canada and the TSX. That goes for America and the S&P 500 and the Nasdaq 100. That goes for the stock markets in Europe and Asia.
I would not avoid Canadian stocks, either. We’re just going to manage the risk with a global portfolio. Canadian stocks have been performing quite well, even with Canada in a per-capita recession for quite some time. The TSX 60 companies generate almost half of their revenues outside of Canada. Even though Canadian business sentiment is deteriorating …
Of course, you can own a diversifed global portfolio by way of the Canadian asset allocation ETFs. Here’s XBAL-T over the last year, the fund is up almost 2% in 2025 as well …
Ahhh, the global balanced portfolio 🙂 Currently the ETF is 26% U.S. equities, 15% Canadian, 15.5% International developed and 3% developing markets. 40% of the fund is in Canadian and U.S. bonds.
XGRO-T is up 11.5% over the last year.
Ignore the noise
I know it’s not easy, but do your best to not react to the ‘noise’ and threats. I think it’s a great idea to buy Canadian and avoid the U.S. products and travel. That will put pressure on U.S. companies and services. But prioritize your economic safety over retaliation. Stay the course with a global portfolio. Manage the risk as you need with cash/bonds/gold/defensive equities.
Be sure to invest within your risk tolerance level. Be sure to understand all tax consequences if you make any portfolio moves in taxable accounts. I just added ‘how to invest in taxable accounts’ for Retirement Club. That should generate some good discussion in our secur online community, as one of the club members has asked the group for ideas on how to invest a $700,000 inheritance.
The Sunday Reads
Dividend Hawk took a loot at his portfolio this past week, and I see that we shared in some RTX dividends. You’ll find some earnings snapshots, including …
- General Mills, Inc. (GIS) Reports Fiscal 2025 Third-quarter Results and Updates Full-year Outlook; GIS reported a Non-GAAP EPS of $1.00, reflecting a 15% YoY decline, but still beating expectations by $0.04. Revenue fell 5.1% to $4.84 billion, missing estimates by $110 million. For 2025 Management expect organic net sales to decline 2% to 1.5%, adjusted operating profit and adjusted diluted EPS projected to drop 8% to 7% in constant currency.
- Power Corporation of Canada (TSE:POW) Reports Fourth Quarter and 2024 Financial Results; POW reported quarterly adjusted earnings of C$1.28 per share for the quarter ended December 31, higher than the same quarter last year, when the company reported EPS of C$0.89. The mean expectation of analysts for the quarter was for earnings of C$1.39 per share. Adjusted net asset value per share was $60.44 at December 31, 2024, compared with $53.53 at December 31, 2023. Book value per share was $35.56 at December 31, 2024, compared with $32.49 at December 31, 2023.
Banker on wheels delivers another robust mix of posts and podcasts of the week. Dollars and Data says, never root for a recession even if you seek those lower prices.
And for those looking for added inflation protection – how to use commodities in the portfolio. In Canada we have a very good one stop option with the Purpose Real Asset ETF – PRA-T.
At Findependence Hub, some stronger language with – How to invest and shop during Trump idiococracy.
At Tawcan Bob offers some interesting and random thoughts from Nuremberg.
Thumbs up to stocktrades favourite large cap stocks in Canada. That’s a nice mix of offense and defence.
And a reminder that risk is always present. It is the price of admission for the incredible wealth creation that equities offer writes Charlie Bilello. And remember that diversifcation is the only free lunch.
Thanks for reading. Please share this Sunday Reads with friends and family. Please share this post on social media.
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Playing the US stock market at present is a bit expensive at present with the exchange rate.
And then where is our dollar headed? Up or down further? So you end up playing two markets. The stock market and the exchange rate market. As the dollar has eroded a fair amount the downside is less likely although I have seen it lower in previous years. So if the CDN dollar were to increase in value it means several things. !) you bought too early and paid a premium. 2) Your dividends lessen as the the CDN $ improves, 3) You lose value if and when you sell.
Not to say that CDN equities are the be all and end all but at least you know what you are getting. After that it is up to the gods to determine if you were wise or not.
RICARDO
Hi Ricardo, keep in mind this is more of an endorsement of a global portfolio that includes the U.S. And it’s possible that the U.S. remains the most important allocation. And keep in mind, the U.S. can destory us, if they choose.
Hey Dale, I feel this issue of the Sunday Reads was in part inspired by the conversion we had on Seeking Alpha 🙂 (i am the gold explorer dude)
I rode the bull market big time last year with a good part of my portfolio that included US stocks (such as Nvidia, Broadcom) and lots of high-flying Canadian small and microcaps. Managed to get +40% last year (best year ever).
But with Trump and his rhetoric since February I sold most of my high-flying stuff at big profits. By doing that I managed to be down only 2% this year so far. I had to go through every other stock I had to figure out which were the ones that would be impacted by tariffs/recession. The money I made last year was the last big push I needed to have enough for retirement.. Now I need to secure that money for what is coming.
I am now in good part “cash/bonds/gold/defensive equities”, following your advice, with 15% bonds, 10% gold equities and bullion, 15% consumer staples, 10% healthcare. I also own another 15% in defensive industrials (WCN, TRI) or financials such as (X, DFY, OLY). So about 65% of my portfolio is definitely now defensive.
My growth stocks are mostly software names (CSU, DSG, LMN, TOI, VHI) with a few other industrials as well.
All Canadian or International :-).. although my definition of Canadian is a bit loose, having a TSX ticker is enough even though some companies have most of their revenues in the US (such as TRI or WCN)
Thanks again for your work for investors
Nice to see you on Cut The Crap Investing, thanks for stopping by. And yes, you and many others had mentioned avoiding U.S. stocks, so it is certainly inspired by readers and other articles I’ve seen in the press, and comments on social media.
Thanks for sharing your portfolio, nice to see you embrace a mix of offense and defence. As always, feel free to reach out at any time.
We’ll see you here and there 🙂
Dale