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Given that the article covers several different topics, it's hard to know where to begin.

First, though, for me the foreign content issue is about personal freedom. Arguments about relative investment performance of Canadian versus foreign markets are beside the point. I am willing to accept an RRSP deal that says: Give me tax deferral, and I'll give up tax preferential treatment on capital gains and Canadian dividends. I am not willing anymore to accept the Government's rider that says I must keep 80% of my money in companies that trade on a Canadian stock exchange.

Second, we had strong currency at the beginning of the 1990s. Remember the allegations that people made saying there was a conspiracy to keep a high Cdn$ to help US companies when NAFTA was adopted? And in 1994, the Cdn$ rose against the US$ (I know, I was in Chevron at the time, whose roughly 20% gain I gave back because of the currency). Canadian markets were strong in years subsequent to 1994, but that doesn't imply that other markets will be weaker than they have been.

Further, currency risk is a possibility, but the 20 year trend has been against the Cdn$. Croft is using one year's worth of data to put a fright into people. Foreign investment by Canadians does face a currency risk, but that risk depends on the time when people actually cash in their US$ holdings, and we have some control over that.

Also, what "strength" is there in the loonie? Oil prices have doubled since last year: that's d-o-u-b-l-e-d: 100%. The loonie has risen 5% (65 cents to 68 cents): f-i-v-e percent. Hello!!! (Palsan: this isn't directed against you, but against the arguments Croft makes.) Why have people become so accepting of a 68 cent dollar?

I can't speak to inflation, but from what I've read Greenspan is raising rates now to counter the inflationary forces that will show up in 12 to 18 months from now. So I question Croft's assertion that inflation is behind us -- or at least the US.

His point about the resource companies becoming profitable is probably worth following up on, if one is interested in investing in resource companies. But I'm typically not one of those persons. (I do watch a few though. I note that Renaissance Energy is down again into the $17 range, from a high of around $24 earlier this year, as the price of oil rose. Oil is still high; why has Ren dropped?)

And what is his argument: that I should forego the Ciscos of the world so I can invest in Teck? Is something wrong with that picture?

Lastly, his comment on the rise of the TSE100 versus the S&P500. Cherry-picking again. The S&P100 is up 28% (not currency adjusted) versus 19% for the S&P500. Nasdaq100 is up 95%. He neglects to say that probably most of that TSE100 gain is from Nortel and BCE. This weekend's Financial Post says that the "unweighted" TSE300 return is 4.3% year over year (compared to 20.3% in its proper, weighted form). Why doesn't he comment on that?


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