The Boom in Our Own Back Yard

Look north, my dear reader, look north. Because just north of the U.S., in our very own back yard, the best performing stock market in the world just continues moving higher and higher.

I’ve often written about the merits of investing in the S&P/TSX Composite (what could be called the Canadian equivalent of the Dow Jones Industrial Average). For Americans, investing in securities outside the U.S. might make sense right now because of the mounting pressure on the Greenback. As the U.S. dollar falls in price, other world currencies rise in price. Hence, if you can find that right foreign investment, you could very well see a profit on the currency play too. And I believe the best stocks with best potential for capital appreciation right now are in resource rich Canada.

The Canadian government announced today that the country created five times as many jobs in March as analysts had expected, closing the strongest quarter in job creation the country has seen in five years. And unlike the U.S., the Canadian real estate market is strong. In Canada, the subprime lending market is almost non- existent. There’s a program for first-time home buyers where a new buyer only needs a down payment of 5% to 10% of the price of the home — but that market is very small, too. Most homes are purchased with a minimum 25% down payment. Canadian banks (there are only six banks chartered by the government to operate as schedule “A” banks in Canada) are also amongst the most profitable and solid banks in the world.

But the real reason I like Canadian stocks: The Toronto Stock Exchange has the listings of some of the world’s largest gold and oil producers — and I’m very bullish on both of these commodities.

>From March 2003, the S&P/TSX Composite is up over 100%, making it the best performing stock market in the industrialized world. As gold prices continue to rise, as oil prices start moving higher again, the S&P/TSX Composite will continue to rise in value. If you don’t have exposure to this booming stock market yet, it’s not too late. The biggest gains from Canadian stocks could be yet to come.