As we welcome the New Year, I trust that you have settled into 2025 and are ready to reflect on the past year while looking forward to the future.

 

2024 continued the trend of the past five years, marked by a series of unexpected events. Globally, we witnessed ongoing conflicts, including devastating wars that have plagued various regions. There were significant political developments, including the near assassination of U.S. President Donald Trump and the withdrawal of Joe Biden from the presidential race.

 

At home, we experienced notable events, including the Canada Post strike, wildfires in Jasper, immigration reform, and rising unemployment.

 

Despite these challenges, 2024 proved to be a banner year for the investment market. This serves as a reminder that attempting to time the market based on forecasts or personal sentiments is an ineffective strategy.

 

The primary driver of the market’s return in 2024 was the anticipation of interest rate reductions. The decline in inflationary pressures provided central banks with the opportunity to implement an aggressive rate-cutting cycle, resulting in reduced debt servicing costs for most publicly traded companies and directly increasing corporate earnings.

 

While 2024 was a resounding success for investors, our outlook for 2025 remains cautiously optimistic. We anticipate continued growth, albeit at a significantly slower pace compared to the previous year. Interest rate reductions are likely to continue, probably at a more gradual pace.

 

The most pressing concern for investors is the potential reintroduction of tariffs. U.S. President Donald Trump has once again threatened large-scale tariffs on Canada, Mexico, and China. From a Canadian perspective, such tariffs would have substantial economic implications, negatively impacting our GDP and potentially softening U.S. GDP. Although tariffs are likely to be implemented on both sides of the border, the extent of tariffs is anticipated to be less severe than the proposed 25%. When combined with the rate-cutting cycle and a slower inflation year, market growth is expected to slow down compared to previous years but still remain positive.

 

As always, Peter and I are more than willing to discuss your personal investment portfolio and provide our insights into the market outlook in greater detail.

 

Sincerely,

 

Phil