By Tom Bradley

With a decline of more than 200 points Wednesday, Canada's benchmark stock index erased its gain for 2012 and cemented its position as the worst-performing major stock index in North America. Even France's CAC 40 and Italy's Mibtel index are outperforming Canada year-to-date. What gives? At my last check, which was a few minutes ago, the euro-zone slipped into a recession for the second time in four years as GDP for the 17-country block that proudly use the euro as their currency shrank 0.1 percent in the third quarter following a decline of 0.2 percent in the preceding three months. In the U.S., where unemployment is higher and interest rates lower, stocks continue to outshine their northern counterparts. What's a Canadian investor to do as the year comes to a close?

This commentary was from a blog posting by Marty Cej, my second favourite TV host on BNN (his partner, Frances Horodelski, is #1). His closing question begged for a response.

My recommendation to all but a few Canadian investors would be to do nothing. Specifically, I mean no changes in the short term, unless they’re already scheduled to do a portfolio review or regular re-balancing.

Marty of course is referring to the short-term squiggles and noise that go along with being an investor. His comments came in the middle of last week, which was one of the weakest ones we’ve seen in a while. Over the last three plus years, however, the bond and stock markets have provided excellent returns, even with a number of speed bumps like last week.

Clients likely have nothing to do because if they have a plan for their portfolio, part of which is a Strategic Asset Mix (SAM), then the last few bumpy weeks won’t have meaningfully changed anything. Nothing has moved enough to warrant re-balancing and the news content is absolutely unchanged from the on-going dialogue around debt (too much), insolvent governments (too many) and economic growth (too slow).

I don’t know if this week will be as noisy as last, or as weak, but I wouldn’t be surprised or disappointed. On the way to attractive long-term returns, there will be many repeats of last week.

NOTE: As for our strategy, the Founders Fund continues to be fully invested in stocks (60% of total assets) and low on bonds (27%). On the stock side, we continue to have a bias towards foreign (34%) over domestic (26%), based on valuations and the type of companies available (consumer, industrial, technology and healthcare). In light of the world’s debt issues, the fund holds extra cash (13%) as a safety measure.