By Eric Van Enk on June 22, 2024.
STOCK IMAGEMost Canadians invest in what they know best which tends to be Canadian companies. This tendency to invest predominantly in the country we reside in is known as a home country or domestic bias. There are many reasons why it makes sense to invest outside of Canada including diversification and the potential for superior earnings growth.
Given the legal commonalities and tax treaties between Canada and the U.S. as well as the size and diversification of the U.S. economy, the first place most Canadians look to diversify their investment portfolio is south of the 49th parallel. As shown in this week’s chart, the valuation gap between U.S. and Canadian stocks is near an all-time high. In other words, Canadian stocks are currently trading at a historic discount to their U.S. peers. Why is this the case?
If I had room for another chart, I would have…
