There is no way to sugarcoat it: 2025 has been a rollercoaster. We began with protectionist shocks in the first quarter, navigated the historic volatility of “Liberation Day” in the spring, and faced renewed trade barriers this summer.

Despite the headlines, our disciplined approach remains our anchor. Below is a review of the significant events that defined the markets this year.

2025 Year in Review

Q1: The Prelude

The year opened with immediate volatility as the trump administration in the U.S. threatened new tariffs on Canada and Mexico, shaking investor confidence. Markets stumbled in February when retaliatory measures were announced, where speculative hope unwound. Major tech players drove the decline as investors reacted to “head fakes” on trade policy and surprising rhetoric regarding the annexation of allies.

Q2: Liberation Day & Divergence

On April 2, Trump’s “Liberation Day” executive order for reciprocal tariffs was signed. The reaction was swift: over the April 3–4 period, the S&P 500 dropped nearly 11% combined, erasing trillions in value. However, markets roared back 9.5% on April 9 after a 90-day pause was announced. Throughout this chaos, Canadian equities held their ground—particularly in industrial sectors—while banks outperformed thanks to strong balance sheets and attractive valuations.

Q3: Concentration & Trade Relief

Anxiety returned in August with threats of a 35% tariff on Canadian goods. However, volatility eased as officials signaled that the existing North American trade agreement (CUSMA) would likely shelter the vast majority of Canadian trade from these penalties. While U.S. equities rebounded, leadership became historically narrow. By October, just 10 companies accounted for roughly 40% of the S&P 500’s market value.

Q4: Gridlock & Rate Cuts

The fourth quarter headlines have been dominated by the U.S. government shutdown, which lasted 43 days and weighed on market sentiment. Gold reached record highs due to ongoing inflation concerns. On December 10th, the Federal Reserve cut interest rates by 0.25% in an effort to support the labour market, which—while still better than historical averages—is nearing a four-year high in unemployment.

Key Volatility Events

Our Perspective

Throughout these shifts, our strategy has not wavered.

• Focus on Fundamentals: We focus on owning high-quality businesses with sustainable earnings.
• Managing Hype: While AI enthusiasm accelerates, this year’s volatility reminds us that “exuberance” often precedes corrections. We remain diversified to mitigate these risks.
• Opportunity: We continue to monitor our watchlists to deploy capital into quality companies when indiscriminate selling offers attractive entry points.

If 2025 has taught us anything, it is that markets react violently to uncertainty but ultimately follow fundamentals over the long term. While headlines generate noise, our disciplined approach ensures your portfolio remains built to weather these storms and capture long-term growth.

If you have any questions about your personal financial plan, please do not hesitate to reach out. Call 416-391-3764 for a free consultation!