We are amid three government elections in North America, one being in the U.S.  New Brunswick has the only leader who has cut debt and taxes. However, during this election  Premier Higgs has stated he will add $2b to the debt if re-elected.  Here in B.C. our Premier believes in Trudeau style of government; spend as much as possible and “let the budget balance itself”. 

Today’s elections should be fought on how to cut government spending by decreasing the size of the bureaucracy, reallocate funds we send outside our borders to the medical sector, education system, and military, and more importantly cut taxes so people have more money to spend. In 2023 the average Canadian family income was $109,225 and from that 44.8% ($46,988) went to taxes, compared to 33.5% in 1961.  An economy cannot flourish when it loses so much money to taxes. 

Canada’s economy is in a 5-year downward trend with no sign that the bottom is near as long as Trudeau is in power.  Yet our stock market is doing well because of falling interest rates, but more so because foreign investors are returning to Canada the more it looks like Trudeau is on his way out.  The Toronto stock market is up 14% this year, an excellent record considering Ottawa wants to make Canada a third world country. 

Other than investing in Chubb(a Canadian insurer) and Occidental Petroleum, Warren Buffett’s Berkshire Hathaway has been selling shares, including a sizeable investment in Apple. According to recent filings with the US Securities Commission, at the end of June, Berkshire Hathaway held $234.6 billion in T-bills, which is more than the U.S. Federal Reserve held on September 25. As of the end of June, Berkshire’s investments in stocks totaled $284.8 billion. It is easy to conclude that Buffett shares Sacola’s belief that Cash is King in this market and shows the world wants to invest in Canada. 

Even though falling interest rates tend to result in climbing share prices, the economy is slowing and the risks of a sell-off or a sustained period of falling corporate profits is growing.  Due to the stock markets being in expensive territory, continue to hold all those nice dividend paying shares, but currently do not to add to positions.  Place the available cash into one-year GIC’s which today is roughly 4%.  When reality returns to the stock markets we expect the correction to be fast but there will be no long-term bounce back due to too much debt holding back the economy. 

We strongly believe Canada has the best potential in the world.  The only thing missing is the will to make it happen.  We are one of the world’s richest countries due to our resources which will be needed for the rest of this century and well into the next. Investment returns will come from dividends and interest for the rest of 2024 and probably most of 2025.  Let commonsense be your guide for the next eighteen months. Stock markets in North America are vulnerable to sizeable drop.  

Today Canada must immediately change direction.  Whoever wins the coming election will need a couple of years of trying to begin to correct the mess Trudeau and the Liberals have created.  Canada has so much potential but zero drive to join the real world.  We desperately need an election today, not tomorrow.