A decade in the Canadian Market

A decade in the Canadian Market

  • In the last decade, investors would have been better off investing in guaranteed government bonds and avoiding risky and volatile equities.
  • While the stock market gained about $660 billion to surpass a $2-trillion market cap, most new entrants such as marijuana stocks failed.
  • According to Avi Hooper, a portfolio manager at Invesco, Canada’s underperformance is justified as it’s a smaller market, so there’s less diversification of sectors.

How good have Canadian stocks performed over the last decade? It’s simple: investors would be better off investing in guaranteed government bonds and avoiding risky and volatile equities.

A combined bond investment of provincial, municipal and federal bonds returned 94% amid the financial crisis. But central banks boosted economic growth due to lowered interest rates, stimulating bond prices as they typically rise when interest rates fall.

All in all, here are some highlights for the past decade:

Roaring stocks

The Canadian stock market made some significant milestones in the past decade, gaining about $660 billion to blast through a $2-trillion market cap.

Canada has a reputation for attracting ‘newest’ investment trends such as marijuana and cryptocurrency. While the country’s oldest companies still survive and thrive, flashy investments have always sparked early-stage winnings.

But most of the new entrants fail – for instance, just a few months after legalising marijuana stocks, they have dipped more than two thirds, plunging the overall market cap.

Energy stocks haven’t been doing well either, following a move by foreign companies to pull investments from oil sands projects amid a slump in Canadian crude versus the U.S. benchmark due to pipeline bottlenecks.

Natural resource and energy companies recorded the worst performances on the S&P/TSX Index in the decade.

Dwindling listings

Over the last decade, the Canadian benchmark has experienced a dip in the number of companies listed. But tech company listings rose during the decade. While Blackberry never regained its former status, other upcoming tech unicorns have been recording impressive numbers. Shopify has rallied more than 1000% since being listed four years ago. Lightspeed POS Inc. surged more than 60% since being listed early this year.


The Canadian bond market was this year pushed to a decade-high by investors, lagging their global counterparts.

Avi Hooper, a portfolio manager at Invesco, which has $1.2 trillion under management, said in an interview: “Canada under-performance is justified as it’s a smaller market, so there’s less diversification of sectors.”

Portfolios containing government bonds during this past decade had a party.

In 2009, 10-year bond yields shed more than half to 1.66% from 3.6% following the central bank’s interest rates cut. It was around the same time that US Treasury bonds, which moved from 3.83% to 1.93%, were established.

Looking at the next decade, it may only take courageous investors to make such bets.

By Damian Wood
As an experienced trader, I work for myself managing my own small portfolio and also contributing on several investment news sites. I mix my passion for the industry and journalism to bring my readers informative and trustworthy articles.

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