North America Is Still The Place To Be For Stock Investors

Igor Manukhov - Nov 08, 2024

The US and Canada continue to provide the best returns for equity investors compared to global markets.

2024 has been a remarkable year for stocks, making it a good time to review holdings and ensure that portfolio is well positioned for 2025. I like to start with broad strokes first to ensure that my positions align with current market trends.
 
First, we need to figure out which regions in the world offer better returns for investors. Since we are in Canada, we will be comparing all other regions to our home country.
 
  • The grey chart compared US stocks to Canadian stocks. A rising chart indicated that US stocks are outperforming their Canadian counterparts.
  • The pink chart compared EAFE stocks (Europe, Australia, Far East) to Canadian stocks. As evident by the chart, EAFE stocks are currently underperforming Canadian stocks.
  • Finally, the orange chart compares performance of emerging market stocks to Canadian stocks. This one is a wash, but given that all other things being equal, ownership of local stocks is less risky than foreign stocks. This is due to better familiarity of local companies. I would give a win to Canadian stocks here as well.
 
The four regions are ranked in a following order from best to worst based on relative strength:
 
  1. US
  2. Canada
  3. Emerging Markets
  4. EAFE
 
Given these readings, I would overweight US and underweight EAFE in my portfolio.