Shot in the Foot?
Igor Manukhov - Apr 02, 2025
It like Canada is gaining strength relative to the US. Canada has been the better place to invest since last June.
Last week, we reviewed a relative strength of the EAFE market. This time, I wanted to bring the focus back to North America and review the relative strength of the US vs Canada.
Earlier this year, when talks about tariffs just began, the consensus was that US will be a better place to invest. The reasoning was that if Canada and US had to fight, the US will emerge victorious. A fair assumption given relative sizes of moth economies. Canadian stocks have been outperforming the US since last June.
Take a look at the chart below: a rising black line represents US outperformance. Notice how the trend has been flattening, meaning the Canadian stock market may win this time.
The US has been a dominant market since 2011, so it is hard to imagine it not coming out ahead. But there were periods in history (from 2000 to 2010) when Canada outperformed. With this recent shift in relative strength, I believe Canada at least deserves a spot in your portfolio. If this trend continues, it might be a good idea to overweight it against US.
