Want to give yourself some exposure to Canada’s commodities, Canada’s economy, and Canada’s currency,the Loonie? (See my 8:30 a.m. post today for the reasons that makes sense.)
Here’s a quick eight stock portfolio to buy when the time is right. (I think you’ll get a buying opportunity within the next six months–or much, much less.)
You could do worse than to buy shares of the iShares MSCI Canada Index (EWC). With one buy you’ll pick up three of the stocks in my eight stock portfolio: Toronto Dominion Bank (TD), natural gas producer EnCana (ECA),  and fertilizer giant Potash of Saskatchewan (POT). The last two of those are both members of my Jubak Picks 50 long term portfolio.
With the ETF (exchange traded fund) buy you’ll also get exposure to Suncor Energy (SU), Royal Bank of Canada (RY), and Barrick Gold (ABX). Nothing wrong with those picks but if you’re building a portfolio stock-by-stock, I think you can do better.
I’d complete my eight stock portfolio with shares of Canada’s two coast to coast railroads, Canadian National Railway (CNI) and Canadian Pacific (CP); oil producer Imperial Oil (IMO); molybdenum miner Thompson Creek Metals (C), and natural gas pipeline company TransCanada (TRP).
Of those, Thompson Creek Metals is a member of both my Jubak’s Picks 12-18 month portfolio and my Jubak Picks 50 long-term portfolio.
For more on when to buy these shares see my 8:30 a.m. post today.
(Full disclosure: I own shares of Potash of Saskatchewan, Thompson Creek, and Toronto-Dominion in my personal portfolio.)
Dear Ed,
Obviously you asked Jim, and I’m not Jim, but…
There are some American-based brokers that allow you to buy directly on foreign exchanges. I use Interactive Brokers, which allows you to buy and sell Canadian, Australian, Hong Kong, Japanese, and most European stocks, as well as American ones.
But even if you hold your Canadian stocks in an American account, e.g., through ADRs listed on the NYSE, you’re still taking advantage of the strengthening Loonie– it’s just that in that case you’d see the strengthening Loonie show up in the USD-denominated stock price. For example, on any given day if you multiply Encana’s NYSE (USD) price by the exchange rate, the result will be very nearly equal to Encana’s Toronto Stock Exchange (CAD) price. So I really am not sure why your Fidelity International person is saying what he/ she is saying– it’s just not right.
I hope that helps.
Thanks Jim for real precise answer to my leading question … just wondering wont it be better to time our entry during the bigger correction late in the year or early 2010 or you think it may not happen and we should get in during the forth coming 10% or so correction
Hope USD will also bounce soon when equity markets correct so that we may get more bang for our buck when we invest overseas
Cheers
Jim,
I have thought about setting up a Canadian portfolio for some time due to my fear of a collapsing US dollar, however Fidelity international trading tells me there is no way to take advantage of a strenthening Loonie because you would be buying and selling in US dollars due to holding in your US account. Are they correct, or is there some other way to do it?
Ed
Hi Jim,
First – congrats on the move, and thank you for the many years of your wonderful insight.
Would you say getting into BHP provides a similar type play? I think there’s more upside there, plus the dividend helps.
Jim
Any thoughts about the Agrium, CF Industries and Terra buyout situation. Also what about MON vs SYT?
Thanks for the new site
Jim, I’ve got to thank you for recommending TC a few months back. I’m glad I had the guts to double down when it dropped from $6 to $3. Probably one of the best buys of my life. Not necessarily for returns, but just because it made so much sense. It was trading way below book value for goodness sake!
I just trimmed a few shares (kind of had to force myself to do it, but I did it). I think I can buy them back cheaper when the correction comes. But still, it’s an outstanding play… thanks!
Jim,
Excellent analysis. Do you buy currency as well as stocks?
Definitely agree with you about the coming correction and the possibility of a big dip next year. I’m interested what you are watching for indicators? I’m focused on the amount of exports from the US. I think this is a must to replace the lost US consumer. The slower this happens the larger the overall decline.
In relation to this is how early the central bank has to raise interest rates and how the recovery outpaces other countries. Short term if we get a good pop and the dollar gets a lot stronger it drags out the long term recovery and of the US becoming more of an export economy. I see the 5+% savings rate staying for a long time.
Hey Jim,
Great ideas! TransCanada is actually TRP (not TCP). I’ve been watching Thompson Creek since you mentioned it back in Jan/February (when it was around $3)– it’s run up pretty well.
I’m looking for a 10% or so correction in the very near term that might be a decent entry point and then a bigger dip late in the year or early in 2010 when we discover that bottoming takes longer than we expected in July’s rally. Nothing more precise than that.
Jim when u say in six months or much much less time ..looks like you have something in your mind about timing an entry …pls let us know your thought process … maybe we can use it in some other way also …
already have POT and TC! thanks Jim