Canadians Sound Off on Markets, Health Care

10/22/2009 1:30 pm EST

Focus: MARKETS

Howard Gold

Founder & President, GoldenEgg Investing

Hopeful but cautious. That was the mood of individual investors and traders with whom I spoke at The World MoneyShow at the Metro Toronto Convention Centre this week.

Having lived through the crash, these Canadian investors for the most part believe that the current rally is real, but they’re worried about the health of the banking system in their giant neighbor to the south. That may be why most of them aren’t throwing money at the market now, although some were shrewd enough to scoop up bargains at the bottom.

And for the most part, they’re satisfied with their government-run health care system, although a couple of them wished they had more competition and choice.

I interviewed five investors and two traders in the exhibit hall here—not a scientific sample, to be sure, but a pretty diverse group by age, gender, and background. Most hailed from the greater Toronto area. They were very nice people, I might add, and had genuine affection for the US, although not without some friendly criticism.

Unfortunately, I didn’t interview them in March, so I don’t know how they reacted to the worst stock market crash in 80 years. But most of them appeared to keep their heads.

“I held tight,” says Henry Kliewer of Scarborough, Ontario, who didn’t buy, but didn’t sell (like 38% of our MoneyShow.com users in a poll we took earlier this year).

“I held on—did very little trading and I was happy about that,” says Patricia Hemming of Toronto.

The braver ones grabbed some bargains.

“I stepped in and picked up some preferred shares,” says Lloyd Smith, who called them a more conservative way to invest at the time.

Joseph Khan of Toronto, who trades options and foreign exchange, says during the crash he bought calls on US banking stocks. “I made an educated guess that the US government would not let banks fail,” he explains.

Leighan Neeson of Burlington, Ontario made a similar calculation. “I bought more” in March-April, and “did well with Canadian and US bank stocks,” she says. “I’ve made a lot of money.”

“North Americans—especially the US—they’re money makers. That’s what they know how to do,” she declares.

But is there more money to be made now? On that the people I spoke with were divided.

They have confidence in the market now, but are concerned that the current rally has gone too far, too fast.

“It’s a lot tougher now” to find bargains, says Lloyd Smith. And Olev Johanson of Toronto says he’s suspicious of the rally “until I see the housing markets and the banks [stabilize].”

“I think there still can be a lot of things that can pop up yet,” he says.

“I’m still worried about the States,” he adds. “If they’re going to drop, we’re going to drop.”

The two economies, of course, are joined at the hip: More than 75% of the goods and services Canada exports goes to the US.

Trader Joseph Khan is even more cautious. “I think it’s very dangerous to jump in right now, because it’s too late,” he warns.

Patricia Hemming says she’s looking to invest more because she has come into some money recently, not because the market’s higher. But she acknowledges she has more confidence these days. “I think it’s going to go up,” she says.

So does Leighan Neeson, who did well by buying bank stocks near the bottom. “I’m still buying,” she says. “It’s coming all back.”

Back to the highs? Yes, she says. “This is the time to jump in.”

She’s also the most enthusiastic about the Canadian health care system, which I also discussed with these investors and traders. The Canadian government funds health care for all citizens, but it is administered by private doctors whose fees are negotiated by medical associations and provincial governments. Some services, such as dentistry and optometry, are not covered. Health care costs are more than 10% of gross domestic product, a distant second to the US’s 15%-16%.

Neeson describes the system as “wonderful” and says, “That’s why I won’t go to [live in] the States.”

Hemming had the opposite response, based on her recent experiences when her late husband got ill. “I have never seen such dreadful treatment,” she said, including 18-hour waits in emergency rooms and indifference from nurses. She also bemoaned the fact that there was “no communication” between patients and hospital.

Others I spoke with said they liked the system, but that patients needed more choice and competition. “I would prefer if people had the private option,” says Joseph Khan. “If people could pay [for private care,] it would reduce waiting time.”

Their views were roughly in line with public opinion polls, which show that some 80% to 90% of Canadians are satisfied with their health care system. (Nearly three-quarters of Americans are also satisfied with their health care coverage, according to a CNN poll.)

Right now, a lot of Canadian and American investors are probably pretty satisfied with their investment returns since the market lows of March. How long will that last? I don’t know, but I hope their optimism is vindicated rather than their caution.

Howard R. Gold is executive editor of MoneyShow.com. The views expressed in this column are his own.

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