Mid-term investing sits between “set it and forget it” and short-term trading. You’re looking 1–3 years out, trying to capture growth or re‑rating stories without needing to watch the screen every hour.
11.1 What a Mid-Term Thesis Looks Like
A mid-term thesis is a clear, simple story you believe can play out over the next 1–3 years. For example:
- “This bank is undervalued because of temporary fear; as rates stabilize and credit losses peak, earnings and valuation should recover.”
- “This Canadian energy producer is cutting debt and returning cash; if oil prices stay reasonable and balance sheets improve, the stock could re-rate higher.”
- “This global ETF could benefit from AI or clean energy demand over the next few years.”
A good 1–3 year thesis usually has:
- A clear catalyst (earnings growth, product launch, sector recovery, falling rates).
- A rough timeline (quarters, not days).
- A “what could prove me wrong” list (regulation, recession, execution issues).
11.2 Key Sectors for Canadian Mid-Term Investors
Canadian investors often lean into a few core sectors for mid-term ideas:
- Financials (banks, insurers)
- Sensitive to interest rates, credit losses, housing trends.
- Often recover after recessions as loan growth and sentiment improve.
- Energy
- Tied to commodity prices, global demand, and policy.
- Canadian producers with stronger balance sheets can benefit when the cycle turns in their favour.
- Utilities and Infrastructure
- More defensive, often with stable cash flows and dividends.
- Impacted by rates and regulation, but can be mid-term holds in uncertain times.
- Technology and Growth
- More sensitive to interest rates and risk appetite.
- Can rebound strongly when rates stabilize or fall, and when earnings start to catch up to valuations.
You don’t need to forecast perfectly; you just need reasonable, evidence-based expectations about how these sectors behave across the economic cycle.
11.3 How Macro Themes Affect 1–3 Year Trades
Macro factors matter more over 1–3 years than over a few days: