Forget Speculating: This Canadian Stock Is Set for Decades of Superior Returns

Speculating is stressful and confusing. Why do it when you can own top-quality Canadian stocks set for decades of superior returns?

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At times it appears that Canadian and American stock markets are flush with speculation. Whether it be the sudden rush on GameStop or the monumental rise (and fall and rise) of Bitcoin this year, it can just be overwhelming to keep up with the newest trading trend.

Just this week, Jack Dorsey, CEO of Twitter, sold his first tweet as an NFT (non-fungible token) for US$2.9 million. I didn’t even know what an NFT was just a few days ago, but suddenly these are the new “big” craze in the market.

Is it fungible or not?

I thought I was just figuring out what happened with GameStop, and now I have to try and comprehend what asset is fungible or not. Perhaps it is a sign that the world is increasingly becoming digital. Or perhaps it is the fact that investors seems to move faster and faster from one mania to the next. Perhaps it is both. The point here is, I am just not smart enough or adaptive enough to keep up with these quickly changing trends.

Overwhelmed? Ask yourself these questions

If you are feeling a tad overwhelmed, like me, it is okay. During speculative times, it is important to slow things down and remember what and why you are investing in the first place. Ask, what are your financial goals? What level of risk are you comfortable with? What is your time horizon? Why are you investing and what are you hoping to achieve?

If you can answer these questions, then it can help frame what Canadian stock investments, and investing styles should remain relevant in your life. For me, I’m not interested in making a quick dollar. I am neither smart enough or agile enough to time the market by trading.

What kind of Canadian stocks do I want?

However, when I invest in a Canadian stock, I am investing in a stake of a real tangible business. Hopefully, it is a productive business with a great product or service or both (even better). Hopefully, it is a business with major secular tailwinds supporting its growth. Best of all, hopefully it has a smart management team that is highly experienced at allocating and multiplying capital year in and year out.

A Canadian stock to own for decades

If I can think of one Canadian growth stock/business that meets this criteria, it would have to be Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM). Brookfield may not have the flashiest business. Chances are high that most Canadians have never even heard of it. Yet that is why I like it.

It is one of the largest alternative asset managers in the world with $600 million of assets under management. It owns and manages funds and subsidiaries operating everything from infrastructure to insurance to distressed debt to real estate.

What I like most is that this Canadian stock generally takes a contrarian approach when investing. BAM has an expert team of managers across the world. Whenever there is dislocation in a market or a crisis in a certain asset class, BAM is there swiping up assets at fire-sale prices. Often, the market thinks it is crazy when BAM is doing this. However, it is only a matter of time before the same market is paying a premium to buy those assets back.

BAM has done this with telecom assets in India, electric infrastructure in the U.S., and pipelines in Brazil. It has the balance sheet to be advantageous but also the management expertise to be patient and wait for the right opportunities.

The Foolish takeaway

This Canadian stock has a great track record of success, which is supported by strong demand for its funds and assets. Combine all that, and BAM has a winning formula for success. Rather than speculate on non-fungibles, I would rather own a stake in Brookfield’s diversified array of productive, essential assets. I’m happy to let its expert management team compound my capital for me. With this type of investing, I sleep better at night, and I fortunately never have to understand the difference between fungible from non-fungible.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robin Brown owns shares of Brookfield Asset Management. David Gardner owns shares of GameStop. Tom Gardner owns shares of Twitter. The Motley Fool owns shares of and recommends Brookfield Asset Management and Twitter. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV.

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