Canada is going through a rocky patch, but don’t let short-term troubles color your view of the long-term value of Canada to your portfolio. Successful investors think in terms of years, not quarters.

Consider Canada’s record. Nearly five years ago we described Canada as “The Northern Tiger,” and we showed Canada was recovering more quickly than the U.S. from the Great Recession. In January 2010 Canada’s economy grew at its fastest pace in three years, the fifth consecutive monthly increase, and the Canadian dollar had surged from USD0.95 at the beginning of that year to near parity in April of that year.

And Canadian stocks in 2010 generated a total return in U.S. dollar terms of 24.9%, trouncing the solid 15.1% gain for the S&P 500 Index, the world’s most widely followed equity benchmark. 2010 marked the ninth year out of the previous 11 that the S&P/Toronto Stock Exchange Composite Index had outperformed the S&P 500.

The two years it didn’t were down years for both indexes. The S&P 500 was down 11.9% in 2001 versus a loss of 17.6% for the S&P/TSX. And in 2008 it shed 37% compared to 45.5% for the main Canadian benchmark. For the first four years of the Canadian Edge era—2004 through 2007—and six of the first eight years of this advisory’s existence Canadian stocks outperformed their U.S. counterparts.

Canada’s run continued into 2011. But in September of that year the S&P 500 began to pull away from the S&P/TSX and posted its first head-to-head positive outperformance since 1998. The Canadian dollar held its ground from late 2011 and through 2012, entering 2013 just above parity with the U.S. dollar.

Now U.S. stocks have outperformed Canadian stocks for four straight years. And the loonie has descended from historic heights, depreciating by more than 20% from an all-time high on July 21, 2011.

The U.S. economy is on a roll, while Canada has been treading water. Global investors have sought comfort in the security of U.S. assets, restoring strength to the U.S. dollar. And progress on energy independence brought about by the shale revolution has limited typical demand from the U.S. for Canadian exports.

And now oil prices have collapsed, raising complex questions about growth in 2015 and beyond and adding to the drop in the loonie. It’s almost certain that this crude crisis will result in reduced capital spending in Canada’s critical energy patch. But don’t overestimate the effect of the energy sector on the overall economy. For more on this, see Ari Charney’s Canadian Currents in this issue.

Lower gas prices will stimulate Canadian consumer spending and that might mitigate energy problems. U.S. consumers will also experience some relief at the pump, which could drive increased demand for Canadian exports.

The now four-year trend of Canadian equity underperformance is a downer. But the Canadian economy remains fundamentally solid, with strong employment. And the U.S. recovery and stores of natural resources that remain critical to global commerce are strong positives.

We remain committed to identifying high-quality businesses built to generate consistent and growing income for the long-term with our bottom-up approach.

In Closing

We’ve received positive feedback in the aftermath of the changes we made to CE introduced in the October issue.

We’ve also received some very constructive criticism, some of which we’ve acted on this month by eliminating excessive “page jumps” and making the new format even easier to navigate with hyperlinks built into the pdf file.

As always, we welcome your comments, questions and suggestions on these changes and any other issues or concerns related to the service.

Please let us know what you think or post any questions you may have to the Stock Talk forum at www.CanadianEdge.com. We’ll be sure to post a reply within 24 hours.

And please join me for the next installment of my monthly online chats with subscribers on Wednesday, Jan. 28, 2015, at 2 pm.

Go to www.InvestingDaily.com/Canadian-Edge/live-web-chats/ for more information and to sign up to receive an e-mail notification for the event.

I stick around to answer just about every question asked, so if there’s something on your mind that’s not addressed in an issue or on the Stock Talk forum this is a great opportunity.