To many Americans, Canada might appear to be a parallel universe: a land of courteous people who generally speak English yet do not hold American citizenship—a country that is both close and far away. Others remember Canada as the country that invaded the United States in 1812 and burned down the White House (despite the fact that Canada did not exist at the time, and the British bear sole responsibility for the attack on Washington, DC). However, approximately 800,000 US citizens call Canada home. Cities such as Toronto, Calgary, Vancouver, and Edmonton, as well as other parts of the country near the US border, have large numbers of US expats. Taxpayers in Canada must pay both federal and provincial (or territorial) taxes, much as citizens of the United States do to the IRS and state governments. The primary distinction is that most Canadian provinces (with the exception of Quebec) do not need the filing of a separate return; the federal government collects provincial. Because o...
Yes, absolutely. And I appreciate you highlighting my prognosis from the December podcast, which was covered in the "hot takes exposed" part. It's worth noting that December is normally the best month on the calendar, but we experienced a 5% decline. So the figures are useful as a historical reference. We recognize that history does not repeat itself, but it frequently follows similar patterns.
The stock market contains a plethora of data and a rich history. 
So we can use these statistical patterns to help us remove some of the distractions and subjective components of what's going on in the present time, allowing us to build a strong framework. However, I believe that it is critical to connect the statistical analysis or numerical data to the underlying principles. And this relates to the conversation we had during the strategy sessions about how Canada's performance may differ from that of the United States or other markets. So, while looking ahead a year is one perspective, let's take a moment to analyze Canada's performance in comparison to the United States in particular. We frequently find ourselves comparing to the US market. What is the long-term impact of this? And that's when you start to see signs that these connections are meant to last. Canada has regularly lagged behind the United States for nearly ten years, beginning with the aftermath of the 2010–2011 financial crisis. It has not lived up to expectations. However, Canada's score improved significantly during the previous ten years. This happened after the tech bubble burst in the early 2000s, when China's need for commodities contributed significantly to Canada's outperformance. Canadian relative outperformance frequently happens in clusters. It usually happens after a successful year or another excellent year.
So that helps to create the mosaic. 
And, of course, investigating these long-standing links can be extremely beneficial. There are a few things we can include. What constitutes the basic foundation? The discounted value remains valid. We've been exposing the undervaluation for quite some time now. Over the last year or so, we have regularly stated that the valuation has been discounted. It's been continually undervalued for years. However, over the last one to two years, the discount has grown much wider. In statistical terms, we are currently selling at a discount of around two standard deviations. When you're above one standard deviation, the forward relative returns are typically extremely good. That is pretty beneficial. That is an issue we have already explored. When analyzing Canada's performance, it is vital to take into account the broader macroeconomic conditions. When we look at the long-term relative returns of Canada versus the United States and how they relate to inflation cycles, we often see a positive link. During moments of rising inflation, Canada usually outperforms the United States. Furthermore, this is tightly linked to overall market conditions. During periods of rising commodity prices, Canada often outperforms. When we consider these macro data sources, we can see a potentially longer period of greater performance than Canada.Sure. As previously stated, the Canadian market differs from other markets throughout the world. Commodities, oil, mining, and financial services all have a significant impact on the TSX index. So you're creating a backdrop for a fundamental examination, allowing you to assess whether this is a good environment for banks.
It's also a good time to be a commodity producer. And that gets us to situations that normally last ten years. 
Historically, we've seen that this trend propels the Canadian market to a higher position, not just in comparison to the United States, but also in many other markets throughout the world, simply because of its makeup. Yes, it is important to consider while discussing commodities. Once again, the time required to increase the system's capacity. It is incredible to watch how the oil price has varied from the peak of the COVID outbreak. Back then, oil was worth negative $40 per barrel, and you had to pay someone to get it off your hands. Moving forward until the middle of 2022, we're looking at a positive $130 per barrel. Then you find yourself in a situation where you're thinking about the market, evaluating its tendencies, and finally deciding whether or not to invest. That investment will take a long time to yield results. As output gradually increases, you ultimately reach a position where you have an adequate supply. Then there's a recession, forcing prices to fall again, and the cycle continues. This back-and-forth trend results from an excess of capacity at the other end. Even if it appears to be common knowledge because they plan so far ahead of time, it can still be extremely difficult to achieve perfection. That is why there are constant boom and bust cycles in certain industries.
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