Investing in the Millenium

The purists correctly remind us that the third millennium doesn’t begin until 2001. Nevertheless, midnight on Friday, Dec. 31, will mark an auspicious milestone as electronic measuring devices switch — hopefully without dislocation — to digits beginning with 20, and the 1900s we have known all our lives give way to the 2000s.

Today’s world is rapidly evolving into one of lap-top computers powered by micro-chips, and high-speed electronic communications systems made possible by breakthroughs in cyberspace and fibre optics accompanied by a proliferating Internet instantly delivering mail and every type of information we might want.

Key in this accelerating, market-driven, transformation is the deployment and investment of savings on a truly global scale. Economic progress and investment wealth creation are now proceeding hand in hand. Our parents never knew the likes. How lucky we are to have the opportunity of being stakeholders in such a world.

Remember, however, that a dazzling array of investment instruments reduces to two basic individual choices — whether to loan or to own. In the former, savings are lent to credit-worthy governments and corporations in return foregular payment of interest and eventual principal payment. In the latter, savings are invested in the underlying ownership of ventures — either directly in the shares (or equivalent) of corporations, or indirectly through equity mutual funds where experts make the choices for us.

The all-important distinction is that bonds and related fixed-income instruments are money-back investments that don’t grow in value, whereas shares in successful corporations or mutual funds do. The risks are higher in equity investing, but so are the rewards in the form of rising dividends, mounting capital appreciation and superior overall returns.

While mutual funds have an important role to play, especially in necessary diversification, I also insist on at least some direct equity ownership in each and every portfolio, all the more now that a “new look” Canada is becoming so attractive in world investment terms. You’d be surprised at the number of world-ranking Canadian corporations. My Canadian Millennium six-pack is chosen from such a list:

  • Bombardier: a leader in transportation equipment of every kind, including a range of regional jets that make it the world’s third largest aircraft manufacturer;

  • Canadian Pacific: a proxy for Canada and a leading North American railroad complex, with major stakes in petroleum and heritage hotels;

  • BCE: among the world’s top telephone utilities, and a 41 per cent owner of Nortel Networks, an undisputed leader in telecommunications switching and Internet access equipment;

  • Suncor Energy: an owner of massive tar sand deposits in north-east Alberta and a world leader in the technology to extract and produce top-grade oil from them economically;

  • Thomson Corporation: still a leading newspaper publisher (including its flagship Globe and Mail), but more importantly, a pioneer and world leader in specialty information and publishing through electronic access;

  • Toronto-Dominion Bank: an innovative world-ranking bank now poised to become Canada’s leading retail financial institution through its pending merger with Canada Trust.
  • Become owners in world-class Canadian blue-chips like these and you’ll be able to share in their progress in more senses than one. Give them time to deliver and I confidently predict a rewarding experience with a Canadian bias. Reinvest the dividends in more of the same and you’ll do better still.