Boycott

Sending a Message or Not?

With a pending trade war between ourselves and the US, common conversation often leads to whether you stop buying US products as a form of boycott.  Buy the Mexican peppers instead of the ones from Texas.  Buy BC or Ontario wine instead of Napa Valley.  What I never hear discussed are our investments.

Most of us have a passive, hands-off approach in trusting our advisor to do the best thing with our savings and investments.  We don’t often think of trade wars when we’re having the investment advisor meeting.  Do you realize that your RRSP, TFSA, RRIF or other investments in any type of ‘balanced’ or ‘growth’ fund will typically have 20% to 30% of the entire fund invested in US stocks and bonds?  For example, if you have $100,000 in a RRSP mutual fund, it’s likely $25,000 of that is invested in the US.

If you’re serious about boycott, moving that $25,000 investment away from the US would send a much bigger message than $50 groceries and $50 alcohol each week.  And moving your investment to a different fund will take your advisor less time than it takes you to read a few labels at the stores each week.

On the other hand, ask yourself why 25% is invested in the US.  Well, frankly, the US market has provided better returns than the Canadian market for years.  For the last couple years, however, the US market has more resembled Canada except for the ‘Magnificent 7’ stocks.  Apple, Microsoft, Google/Alphabet, Amazon, Nvidia, Meta/Facebook and Tesla.

Basically, your 25% position in the US market is supporting the growth of ‘love to hate’ icons such as Musk, Zuckerberg and a few other US billionaires.  Who amongst us is boycotting Twitter or Facebook?

So what?

·         There’s a good argument to be made that your investments should focus exclusively on maximum return without regard for social or political issues.  Profit first and no boycotts.

·         There’s an equally good argument to be made that your investments should focus largely on your beliefs.  ESG funds, boycotts when needed, and profits are tertiary.

·         Where do you sit?

We continue to be over 95% invested in Canada.  I believe in our countries’ fundamental strength in natural resources (Canada’s real assets) and back that up with our investments.

It’s your choice to make.  But do it with all the facts.  And if you’re going to boycott US food and drink or infamous billionaires, do it where it hurts them the most – through your investments.  Avoid hypocrisy, Be Prepared with good information to do it right.