Making money on the Canadian stock exchange requires different skills and knowledge to many of the other major markets. The only other comparable is Australia.
Due to the vast natural resource wealth in Canada, the Toronto index has an abundance of mining and resource companies. These firms specialise in oil, natual gas, gold, silver, other metals and mining generally. Being able to value - or even understand - such stock takes new skills.
In other markets, Hong Kong for example, the index is weighted in other ways. Hong Kong has many banking, financial and real estate companies which means that unusual weighting like this is rare, but not unique.
Canada - in contrast - is weighted much more towards natural
resources and minerals. In many ways, this makes their economy similar to Australia in the developed world. There are, of course, many economies in the world with vast natural resources (countries in areas such as the Middle East, Caspian and equatorial Africa come to mind) but few that are fully developed and manage those resources cleanly and for the benefit of the country rather than a small ruling elite or kleptocracy.
All of this means that in addition to the myriad research skills that a successful investor needs, in Canada it is useful to understand geology!
It is worth being clear about this, reading and understanding the documents produced by a mining company about the prospects for a piece of land is a real skill. Your author has had several of these pass his desk and they could, quite frankly, be in Russian or Chinese.
Then it is also worth taking into account the difference in meaning for economic results. Since the economy is heavily weighted towards commodities, rising oil prices and inflation can actually be a good thing for the economy. In most other mature economies, rising oil prices can have a very negative impact.
This means that stock prices and the main indices are likely to move in ways that investors may not expect. If you are thinking that this may make it possible to diversify a portfolio, you may well be correct!
An unusual example of this has been in existence for a number of months before the time of writing (mid 2012). The problems of the eurozone crisis and the potential for a fiscal cliff in the United States and a slowdown in the Chinese economy mean that investors have been looking for a "safe" home for capital. Since the creation of new money by the European Central Bank and other institutions worries many of a future of weak currencies, some investors have been looking to Canada and Australia. Why? Their currency is de facto backed by natural resources and not just a promise to honour as is the case with most bank notes.
This is clearly a similar line of thought to that once provided by Benjamin Graham when he (and the many value investors that have followed him) looked for asset backing for their investment money. There is clearly something to be said for the asset backing of a company that owns a gold mine or oil wells!
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