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Five reasons the TSX is underperforming

Well, the year is half over, and the Canadian market is to put it bluntly sucking once again. The outlet moncler TSX Composite Index is up a paltry 0.6 per cent so far in 2018. Compare that with the S gain of 1.5 per cent, or the Nasdaq nice 8.7 per cent return so far this year. Yes, the TSX is ahead of the Dow Jones return of 2.2 moncler outlet serravalle per cent for the year, at least. dollar terms, the performance widens. investor in our moncler saldi outlet market this year has lost 3.8 per cent, because of the weakness in the Canadian dollar. What going on here? We thought the economy was strong, and corporate earnings solid. What wrong with our market?Here are five reasons why our market has not moncler outlet done moncler donna so well. Unfortunately, it is hard to envision many of moncler saldi these reasons changing anytime soon.If you think cryptocurrency is a good investment, these five points should convince you otherwiseHedge funds aren’t all they’re cracked up to be here’s whyThese five Canadian small moncler bambino outlet cap companies could produce outsized returns if you can handle the volatilityA weak currencyAs noted above, international investors can lose money piumini moncler saldi even when our market is actually (marginally) higher for the year. Currency plays a key role for international investors. Not just in absolute terms, but in an investor willingness to actually invest overseas as well. When our dollar is weak, it piumini moncler outlet means less interest from foreign investors, so the TSX falters more than it would have otherwise.Canada is not open for businessI don moncler saldi uomo want to get political, but recent events, such as the blocking of the Aecon takeover and the TransMountain pipeline fiasco, do send a bad message to investors, moncler outlet trebaseleghe particularly international investors. If Canada is not more receptive to business opportunities, for whatever reasons, international investors will take their money elsewhere. market this year. market would be down further on the year. Sure, everyone moncler outlet online uomo loves tech stocks. So how come the TSX index only has a 3.2 per cent weighting in technology? The S technology weighting is 26 per cent, in comparison. No wonder the S has outperformed our market. Canada has some great tech companies, such as Shopify and Constellation Software, but they just do not have enough weight in our country main stock index to actually help our market as defined by the TSX Index. Our moncler outlet online shop auto, steel and forestry sectors have already been impacted. Shares of companies in these sectors are very cheap, but investors don care there is simply too much trade uncertainty to make a confident investment. Expect this issue to drag on for some time, potentially further limiting Canada stock market potential.Too much dependence on resources and financialsFor the TSX index, the dominance of a few sectors is well known. How bad is it? Well, materials account for 11.8 per cent of the moncler uomo index; energy, 20.1 per cent and moncler bambino saldi financials, 35.3 per cent. Together, these three sectors make up 67.2 per cent of our entire market, as represented by the index. Energy has staged a good bounce, up seven per cent for the year, but financials are down three per cent. Materials are up this year, but with such a large weighting in financials, the TSX as a whole has barely moved in 2018.How do you, as an investor, adapt to this situation? Well, it is fairly easy: Ignore the index. Set up your portfolio as you see fit. If you like technology, have a piumini moncler 20 per cent or even 25 per cent, sector weighting. If you can stand energy, have minimal representation. If you have some mutual funds or ETFs, they piumini moncler uomo already (most likely) hold bank stocks, so maybe your financial sector weighting should only be 10 per cent, not 35 per cent. piumini moncler scontatissimi After all, you can spend an index, so maybe you shouldn bother following one.Peter Hodson, CFA, is Founder and Head of Research of 5i Research Inc., an independent research network providing conflict free advice to individual investors.

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