Can you smell that, Canada? No, not that. I’m talking about the smell of … optimism.
What? Well, it’s what Americans ought to be sniffing if they’d just use their noses, rather than turning them up at their northern neighbour.
This is the pitch for Canadian Edge, a small investing newsletter that is selling its services to Americans as a guide to the many wonderful investing opportunities that await – if only Americans can cross the “mental border” that prevents them from buying Canadian stocks.
Now, it is likely bad karma for me to highlight the prose of another writer as unintentionally funny. But David Dittman, the chief investment strategist of Canadian Edge, isn’t writing for an audience north of the border. He’s trying to introduce Americans to an intriguing foreign land of which they may not be aware.
“Fellow Investor: When you cross this border, everything changes,” Mr. Dittman writes in a recent e-mail pitch for his newsletter. “Suddenly, you see busy people and ‘help wanted’ signs everywhere – new homes, malls and office blocks sprouting. Cross this border, even the air seems different. To paraphrase a well-known movie line – ‘it smells like … optimism.’”
Mr. Dittman says “the mental border” that keeps U.S. investors at home means “many Americans deny themselves the rewards of investing in a country whose economy runs like a Rolls-Royce, whose citizens are richer than we are and which never suffered a banking crisis, housing crash or fiscal cliff.”
It is, he says, “the world’s strongest economy – an economy backed by a vast treasure trove of oil, gas, gold and other invaluable resources. Big things are happening in the hockey-loving country Americans once mocked for being ‘bland and boring.’ Put it this way: If this is ‘bland and boring,’ you want in on the action!”
Canadians who have watched the Standard & Poor’s 500 surge over the past five years as the S&P/TSX composite struggled to catch up may be shaking their heads. Action? But while Mr. Dittman highlights a number of (mostly unnamed) past picks that have increased more than 600 per cent, he argues the biggest profits are to come.
“If you’ve ever wondered what it would be like to invest in the birth of a new economic superstar – like postwar Japan when their economy catapulted the country into second place in the world – Canada is the chance of your lifetime,” he says, arguing Canada has over a trillion barrels of oil “plus the will to extract and sell it.”
Shrewdly, Mr. Dittman is telling American investors that their country is “mired in self-doubt” under President Barack Obama, while Prime Minister Stephen Harper, he says, “means business – in every sense of the word.”
“Where would you rather invest: In the booming, energy-rich, business-friendly country that’s about to become the Saudi Arabia of the Western Hemisphere? Or the overtaxed, over-regulated country that’s wringing its hands over the Keystone pipeline while playing into the hands of the Chinese, Vladimir Putin and the Saudi oil sheiks? I think the answer’s obvious.” (It seems someone in Canada’s Conservative Party should be given a ghostwriting credit.)
Like all newsletters, Canadian Edge has some winners to tout, as well as some also-rans. Keyera Corp. is up 784 per cent since previous editor Roger Conrad picked it in its 2005 income-trust days. I plunked down $127 (U.S.) to confirm more of the past picks, but I’m too nice – too Canadian? – to undermine his business model by publishing them here.
At the same time, there have been some losers that have offset winners such as Keyera. Mark Hulbert, a newsletter author who tracks the performance of other newsletters, says that in the 17 months through May 31, Canadian Edge has recorded a 9-per-cent annualized return. (His data only start at the beginning of 2013.) The S&P/TSX composite was up 7.2 per cent in that 17-month period. Canadian Edge didn’t immediately respond to a request seeking comment.
All humour aside, there’s something else to be said here. As someone who’s conducted a multiyear effort to get Canadians to consider investing in the U.S. banking industry, it’s fun to see an attempt from the other side. More importantly, it’s a reminder that there are plenty of gems in the Canadian energy industry that may be returning to favour – and if the Americans pick up on that, the extra demand for the shares is good news for Canadians.
Not to be too optimistic, of course.