As Canadians, we might be tempted to react impulsively. I’ve even heard investors express the desire to divest from their U.S. equity holdings.
However, I believe it’s important to be cautious in how we choose to “defend” ourselves, and that certain considerations should guide our decisions as investors.
First, I don’t think it’s wise to harm ourselves for political reasons. There are certainly alternatives to many American goods, but not all of them can be replaced at a reasonable cost. Personally, I’ve decided to cut back on discretionary spending in the U.S., but I won’t stop purchasing what I consider essential or hard to replace.
In my view, the decision to sell U.S. company stocks is not a rational one, as it would amount to a form of self-inflicted punishment. Most of the world’s leading companies are based in the United States, and it’s difficult to find equivalents outside that country. For years, I’ve wanted to prioritize Canadian companies in our managed portfolios, but I’ve run up against the reality of the Canadian stock market, which is very limited in terms of depth, quality, and size.
Another consideration is that the situation in the U.S. could evolve over the coming months and years. The midterm elections in fall 2026 may influence the trajectory. For now, we hear little criticism from Americans (perhaps out of fear of retaliation or financial consequences?), but this dynamic could shift in the months ahead. At least, that is my hope.
Finally, the executives of the U.S. companies you’ve invested in are not necessarily aligned with the policies of their political leaders. For example, I’m confident that many of them disapprove of the widespread imposition of import tariffs.
To me, the long-term stock market investor is, in a sense, “married” to the market and its companies—for better or for worse. We may be going through one of those times I would call the “worse.” But that’s no reason to divorce from the market or from stocks. The “better” could very well be ahead of us in the years to come.
I’m hopeful that things will eventually stabilize in the U.S. political system. In the meantime, the situation may remain unpleasant and even continue to deteriorate, but I believe we must hold firm and resist as best we can—by buying local, for example. For stock market investors, that means avoiding drastic portfolio changes driven by emotion.
Philippe Le Blanc, CFA, MBA
Chief Investment Officer at COTE 100
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