Investors should take advantage of the freedom they have to go where they want – Financial Post

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Investors should remember they can allocate their capital to the regions offering more innovative growth

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Talking about COVID-19 is a very touchy subject these days and it should be, given the tremendous physical and mental health risks it presents and the huge economic toll its taken.

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Our health-care system is stretched beyond means and I cant imagine the amount of stress doctors, nurses and support staff must be under so be sure to send them some love this Christmas season. Economically, you have to feel for those who lost their jobs, then were brave enough to start a business and now face losing it due to protective government policies.

The rise of variants may mean the virus is here to stay and so the tactics of the past may no longer work in the future. From what Ive personally witnessed, most of us are adapting our own ways to manage the risks and, for the most part, have had enough of the lockdowns and are seeking some form of normality with caution. This is something to keep in mind if worried about the potential economic impact of Omicron.

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But if people and companies have been able to adapt as safely as they can while getting back to business, there is no reason our government cant as well. That, however, means relinquishing some control, which can be a difficult thing to do, especially when it currently allows governments to undertake an agenda that completely ignores some deep-rooted flaws within our economy.

Specifically, many might not realize the Organisation for Economic Co-operation and Development forecasts Canada is, at best, expected to achieve real per capita GDP growth of only 0.7 per cent per year during 2020-2030, placing us dead last among advanced countries.

The reason behind Canadas showing is that our labour productivity and utilization are so poor that they are predicted to rank near the bottom versus our peers over the next 10 years and, even worse, finish in last place in the three decades beyond that. Think about that and then ask yourself if any of this was addressed this week in Finance Minister Chrystia Freelandss fiscal update?

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If the federal government is truly trying to build back better, why is this shockingly poor ranking in productivity and utilization not being explored and addressed? How is the climate-change-dominated agenda going to fix this? What about households who have gone all in on leveraged real estate speculation? Were now the fourth-highest indebted in the world at 108 per cent of gross domestic product (GDP), according to BIS data. How susceptible are we to higher interest rates and how will this impact our currency as other central banks such as the United States Federal Reserve undertake their own policy changes?

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Essentially, we have turned into a culture of complacency with little to no incentives in place for the next generation to transform our economy into one that can compete and dominate globally. Our major urban centres are no longer affordable for young people and the jobs being offered are either working for the government or in sectors protected by oligopolies such as banking and telecommunication, which have a track record of putting dividends ahead of employees.

Investors should remember they have significantly more freedom, meaning you can allocate your capital to those regions offering more innovative growth. For example, we much prefer the U.S. banks to Canadian, since their registered investment adviser wealth management model is significantly better than our archaic one, which is dominated by banks and a commission-based Gordon Gekko stock brokerage model.

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We hope young Canadians dont catch on to this reality and start leaving to work in those jurisdictions offering a better standard of living, a more affordable one and allows them to build something of their own. Second chances dont come around often, just ask those of us in Alberta about oil and gas prices.

Perhaps there is a way for our government to use COVID-19 as a means to build back better, but it seems were facing more lockdowns, record spending on areas that have nothing to do with transforming our economy or helping our young people, and the potential for significant tax hikes.

Financial Post

Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc, operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning.

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Investors should take advantage of the freedom they have to go where they want - Financial Post