Are Canadians investing too close to home?

History suggests that investors shouldn’t be concerned about material asset return differences under different political administrations. A portfolio of 60% equities and 40% fixed income has produced an annual compound return of 8.1% since 1860 with a Republican president and a 7.8% annual compound return with a Democratic president.

A globally diversified portfolio of 60% stocks and 40% bonds declined about 16% in 2022—a painful period for balanced investors that raised doubts about the viability of this strategy*.  Some commentators even declared the old standby dead.

As we approach the end of 2024, the outlook for the Canadian economy includes a strong possibility of further rate cuts and below-trend growth.