No matter where you live in North America, it may surprise you to learn that you can invest in both the American and Canadian stock markets. However, you may only want to invest in one if your investment strategy is focused on specific industries. While there are several similarities between the American and Canadian stock exchanges, there are a few key differences you should be aware of before you choose to invest in one or the other.
As an experienced entrepreneur familiar with both the Canadian and American markets, Canadian businessman Jason Adam has made a name for himself by starting businesses such as biotechnology company Elevate Labs and the investment firms Northside Companies and PWL Investments. Jason Adam comments, “One of the first things people will notice about the Canadian stock market is the different varieties of companies that dominate the market. In the Canadian market, the largest concentration of companies is in the industrial, materials, energy, and financial industries.”
Jason Adam continues, “If you’re used to investing in the American stock exchange, you may be surprised to see that tech companies and healthcare companies aren’t as prominent in Canada. These are the sort of factors you should consider if you want to trade stocks on the TSX Venture Exchange instead of the New York Stock Exchange.”
Potential investors in the Canadian stock market should also be aware of the increased prominence of penny stocks in Canada. Penny stocks are stocks from smaller, untested companies that traders often buy for $5 and under. While these may seem like a good deal, there is a fair amount of risk associated with penny stocks because penny stock companies often fail. However, on the off-chance that a penny stock company does the impossible, you can receive a great return on your investment.