The latest comments by the Bank of Canada’s Governor Tiff Macklem in the central bank’s most recent meeting highlight some concerns. Canadian investors should take these seriously. Anyone with any sort of equity exposure should try to follow these announcements. These macro moves have long-term, lasting effects on the direction equities move, in general, over long periods of time.
With interest rates sitting near the lower effective bound and likely to continue to stay at these levels for years to come, stocks have gotten an obvious shot in the arm of late. That said, Macklem has made comments regarding the uneven rebound we’ve seen coming out of this pandemic. Further, the Trudeau government’s efforts have put the Canadian economy in a very deep hole. For these reasons and others, investors ought to remain patient in this heightened stock price environment.
As the real economy sputters along and debt levels increase to new record highs on a increasingly frequent business, the level of risk with respect to the economy increase proportionately. The higher valuations stocks have garnered of late on their own increase the risk profile of equity investments today. So picking companies with the best balance sheets and operating fundamentals such as margins should be the priority for investors. Now is the time to be patient and not aggressive, in my view.
Invest wisely, my friends.
