June 17, 2007 — Canada? Not China? Not Singapore? Not Hong Kong? Not the United States? Canada? Yes, Canada. Just take a look at the performance of the Canadian i-shares ECW chart for the past two years that I’ve posted below. Sure, you may have made more money investing in the broad Shanghai stock market index over the past two years, but by best, I don’t mean what market has had the best broadest performance, but the pertinent question to ask is this. What market has had the best performance over the past couple of years with the least amount of risk and will continue to offer these two characteristics going forward?
My answer is Canada, not China. Furthermore, anyone with any skill may use ETFs to supplement their portfolio but certainly not as their main strategy. Why? If an ETF is increasing 30% to 40% a year, then the top individual stocks that comprise that ETF are soaring by 80% to 150% or more. Therefore, it makes more sense to identify the top components of that ETF and buy into them instead of just purchasing the broader index. Secondly, you have to identify what industries/assets that comprise the ETF have much better risk-reward paradigms and overweight these areas as well. If you can, you’ll have lots of success investing in the Canadian markets and in Canadian stocks that trade on your domestic exchanges. Furthermore, just because I posted a chart of the Canadian i-shares ETF, the ECW, it doesn’t mean that I necessarily recommend buying the ECW now. But I do recommend purchasing individual Canadian stocks now. Stay tuned because there will be more to come regarding this matter. This is just some food for thought for you to digest now.
[tags]Canada, best stock market in the world[/tag]