It’s tough not to also be invested in U.S. stocks as a Canadian investor, especially when you consider how easy, affordable, and accessible U.S. shares are and the added value they can provide to one’s portfolio. Undoubtedly, it’s nice to be invested in Canadian stocks and to prefer the TSX Index.
That said, home-country bias can take points away not only from your portfolio’s geographic diversification but also from its sector- and industry-wide diversification.
Any way you look at it, I think Canadian investors should think about winning on both sides of the border.
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The case for buying U.S. stocks, too
While the names beyond North America might be worth considering as well, I think a Canada-U.S. portfolio is enough to achieve a level of diversification that can help investors win in most market climates. In my view, the S&P 500 and Nasdaq 100 are go-tos for Canadians seeking a bit more growth, while the TSX Index is there for dividends and value. I think you need both, given the potential for growth-to-value rotations and vice versa.
Growth might win in one year, perhaps when rates are headed south, while value triumphs in the next, when rates flatline, market strength broadens, and neglected value names have a chance to catch up. Instead of playing the rotations, I think it makes sense to position for both so that at least a part of your portfolio can pick up the slack when the other side is dragging. Don’t time the market; be ready for anything.
Apple stock is worth buying
When it comes to U.S. stocks, I think Apple (NASDAQ: AAPL) stands out as one of the greats worth stashing away for the coming years. It’s one of the greatest consumer gadget companies on Earth.
As the iPhone and the rest of the devices look to become even stickier as their custom silicon and AI progress looks to widen the economic moat, I think it makes sense to hold the name long term, rather than trade based on expectations of what the near future holds.
With long-time CEO Tim Cook ready to hand over his position to John Ternus, who’s a great hardware guy who can also take Apple’s services business to the next level (services really helped Cook take Apple to new heights), I think there’s little to worry about.
Sure, Cook is a legend. But Ternus is ready for the job, and I’d look for him to take Apple to even greater heights as the firm moves ahead with AI and other transformative technologies.
Salesforce stock is too hard to catch on the way down
As for what to avoid, I’d be a bit more cautious when it comes to the software names, especially Salesforce (NYSE: CRM), as the firm looks to convince investors that Agentforce can put the AI-driven disruption fears to rest.
I’m really not sure what to make of the story as the Software-as-a-Service (SaaS) companies look to undergo a vicious shifting of gears. In my opinion, Salesforce is more of a hold than a buy until the firm can give its big, market-moving response to the AI jitters weighing on the industry.
Which software names will be left behind, and which can continue to post big wins? I find it really hard to tell and would rather wait and see than buy in search of a bottom. In my view, Apple is far easier to understand at a time like this, when AI’s disruptive wave gets a bit bigger and hits a bit harder.
