Don't Dismiss Down-and-Out Canada

Does investing in Canada still make sense? Canada is obviously resource rich. Energy comprises 28% of EWC and materials 13%. Both sectors are down dramatically in a very panicked fashion due, in part, to fears of the global economic slowdown. If you buy into the longer-term idea of commodity demand from places like China, then Canada offers a politically stable way to benefit from the long-term theme.

The financial sector is the largest group in EWC, at 35%. This is a potential red flag given what is still happening with banks. That said, the six largest financial names in EWC are down much less than the Financial Sector SPDR(XLF Quote).

In the short run, it is very unlikely that Canada or any other commodity destination provides much outperformance for a portfolio. The context for this article is to try to add value with global diversification over the course of an entire stock-market cycle. Canada will do that over the longer term even if the last few months and the next few months do not offer much in the way of differentiated returns.

Canada (blue); U.S. (red); Europe, Asia (green)

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Source: Yahoo! Inc.