Tuesday, May 9, 2017

My new GOOC portfolio – Get Out Of Canada

Canadians have always had a self-destructive streak. They want to be the nice guys of the world.  Oil and gas are not nice but are reality. That is where Alberta and the rest of Canada always seem to clash and Pierre Elliot Trudeau is the poster boy of this attitude.  Another liberal to the West, seems to have taken over Trudeau’s baton with blocking Alberta’s landlocked oil and gas – although she favors exporting gas on her side of the border.
In Alberta, we have an NDP premier – a lapse of Albertans’ common sense. But to be honest, after 40 years in power, conservatives deserved a big kick in the behind. But how are we Albertan investors to protect ourselves from the current downward spiral.  I love life in Alberta – it is one of the best places in the world and Canada is one of the best countries in the world. Although due to Canada’s large areal extent and uneven population distribution it tends to tear itself apart politically.
I am tired of the nearly always under-performing Canadian stock market and maybe this is the time to admit that focusing on Canadian investments is a poor form of diversification. Ah… I am sure you’ve figured out where this is going.  Yes, with Canada’s adverse business climate it is time to get out.   Wynne, Notley, Clark and Trudeau – it is virtually impossible to get a more anti-business political stage i.e. the Alliance of Pretty People (APP).
I am economically dependent on Alberta with real estate and owning a business tight to the oil and gas industry. Thus it may be best to have a stock portfolio with heavy international emphasis. So that is U.S., Europe and emerging markets. There are some Canadian large caps with heavy international interests such as the 5 banks, Power Corp, the large insurance companies such as Manulife and asset manager Brookfield.  One must place a small bet on recovering oil and gas say 5 to 10% of the stock portfolio and another 5 to 10% on gold and silver. So that leaves about 50% of the stock portfolio for international markets.  I would say, 30% of that could be invested in the U.S. with world class companies such as Johnson&Johnson, Microsoft, Apple, Bank of America, Brystol Myers Squib… and so on. Finally, with the recovery in Europe on its way, put 15% in Europe and the remaining 5% in Emerging Markets – the latter best through ETFs.  Voila, our new strategy ‘GOOC (get out of Canada)’ portfolio phase I.
If Canada is so self-destructive that over the last 6 months so many international major oil companies ran for the exit, why shouldn’t we do the same to protect our retirement.  Next phase… avoid Canada’s disease of self-entitlement and self-righteousness.

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