Canadian Stocks Pause, Still Up 11.32% for the Year!
If you’ve been perusing Bloomberg News or any other major news outlet, this is not the narrative you might have encountered. You might have read something totally different like, “Canada Stocks Erase 2023 Gain…”.
I believe the author of the gloomy narrative assumed that benchmarks are for eternity and it’s impossible to challenge or improve the market capitalization-weighted 1871 methodology, which monitors the performance of the top 60 Canadian stocks in the S&P TSX 60, which in fact, diminished the gains for 2023. It’s important to make a clear distinction between the benchmark erasing gains for 2023 and individual stocks erasing their gains. If you change the methodology, the narrative changes.
For investors or asset owners who allocate investments to the TSX 60, through the XIU.TO, the ETF with more than USD 10 billion in assets, the notion of Canadian stocks erasing gains in 2023 is sold as gospel truth. The reality must be understood in the context of the flawed methodology of market capitalization weighting. The approach tends to introduce biases and results in concentrated exchange-traded index funds.
While it may come as a surprise, the world of indexing hasn’t seen any groundbreaking innovations since 1871. Exceptional & Rich Indexes serve as a shining example of how it’s possible to take the TSX 60 stocks, apply different weighting methods, adopt an open methodology, and achieve the seemingly impossible i.e. change the headline.
“Canadian Stocks Pause in 2023, Still Up 11.32% for the Year”
Instead of unquestioningly accepting gloom and doom, standard and poor performance investing news and buying into the invincibility of the current mediocre indexes, consider the perspective of Exceptional & Rich™.
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