I just got back from Toronto. All comments about overvalued real estate aside, I learned a lot on this trip, stuff you don’t get from staring at Bloomberg all day.
So I went to see a ballgame at the SkyDome (now known as the Rogers Centre). It’s great having a ballpark downtown. Baseball is meant to be played in a city.
Yost Partners was up 0.8% for the first quarter, while the Yost Focused Long Funds lost 5% net. The firm's benchmark, the MSCI World Index, declined by 5.2%. The funds' returns outperformed their benchmark due to their tilt toward value, high exposures to energy and financials and a bias toward quality. In his first-quarter letter Read More
Since I’m in Canada, and the Jays are playing the Yankees, we get to hear both national anthems. They bring out this big 100-person choir, and they sing the US national anthem, which gets warm applause from the Canadian crowd.
Then they start singing O, Canada.
You can hear a pin drop in that place.
That’s when something incredible happens. About two-thirds of the way through, people start cheering. Then more people start cheering. Then it gets louder and louder, and by the end of it, people are going absolutely nuts. I mean, they are going crazy. For O, Canada!
I have never seen anything like it. Maybe in post-9/11 US. But nowhere else.
In contrast, when you play the national anthem in the US… people kneel! Of course, not everyone kneels. But people aren’t going nuts for The Star-Spangled Banner. You get a golf clap.
You could look at this as some measure of patriotism in Canada vs. the US, but I think that’s a very narrow way of looking at it.
I think people in the United States are still patriotic… but just grumpy! We are a very divided, unhappy, even miserable country. Things have gone relentlessly wrong for the last 15 years.
In Canada, things have gone relentlessly right for the last 25 years. So people are happy to cheer at ballgames.
Sentiment Trading 101
I talked to a lot of smart people on my trip to Toronto, and I learned a lot of cool stuff. But that one moment at the Jays game was worth the price of the plane ticket.
So the conclusion from that is:
- Canadians are happy
- Americans are miserable
Therefore you want to be:
- Short Canada
- Long the US
Why? Because Americans are overly pessimistic on the US (and US stocks), and the market will probably outperform their expectations.
Canadians are overly optimistic on Canada (and Canadian stocks), and the market will probably underperform their expectations.
The US and Canada might both go up or both go down, but the US should outperform.
This of course takes nothing else into account other than sentiment. Not fundamentals, not economics, nothing. It’s not recommended that anyone trade based on sentiment alone. But it’s a good starting point.
This is Canada’s Gilded Age
One of the other spots I hit in Toronto was The Chase rooftop bar on Temperance Street. Cool spot. That’s where all the pretty people hang out, which certainly does not include me.
I will say that while sitting in The Chase, I had that sense of decadence that I haven’t felt since my days running around New York City in 2006. When everyone was really young and stupid and had way too much money. I got flashbacks sitting in The Chase.
I also had the privilege of wandering around Yorkville—the Toronto version of Soho. It’s like the outdoors version of the Short Hills Mall—high-end retail and hotels and restaurants.
I also got to check out some of the surrounding nice neighborhoods, like Rosedale and Forest Hill. I saw some of the prices these houses were printing at. It’s a lot. And I do hear the argument that Toronto is still more reasonably priced than New York, London, etc. I hear that. But it’s clear that this is Canada’s Gilded Age.
I will also say that while there was a lot of construction, I expected more, and a lot of the supply of condos that has been dumped on the market has been gobbled up.
But all of human progress is three steps forward, two steps back. Canada has had about 20 steps forward, with no steps back. Nothing grows in a straight line. Not even Facebook.
I started talking about this three years ago, and people laughed at me. Today, not so much anymore. And Canada may not be the only developed country that’ll get death by real estate…
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