UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: Jacko2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1189  
Subject: Re: Foreign Content Date: 11/29/1999 10:30 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
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?

Don

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Post of the Day:
Value Hounds

Medallion Financial: TAXI!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement