Outlook

As 2025 dawns, Canada faces unprecedented challenges: a turbulent U.S.-Canada relationship under a Trump presidency marked by annexation threats and trade tensions, paired with domestic political instability and a weakening economy. Investors must stay ahead, leveraging opportunities in robust U.S. markets, a depreciating Canadian dollar, and transformative technologies like AI and sustainable energy. Amid uncertainty, vigilance and adaptability are key to thriving in this new global reality.

As we close out a remarkable November, with many portfolios reaching record highs, we turn our focus to the road ahead. 2025 presents new questions and opportunities for investors, from anticipated interest rate cuts in Canada to shifts in energy markets and the enduring strength of the "Magnificent Seven" tech giants. This month, David explores the key factors shaping the investment landscape for the coming year and reaffirms our long-term commitment to building wealth through disciplined strategies.

On Tuesday October 29th, 2024 seasoned investors Barry Schwartz and Ernest Wong hosted an exclusive webinar, Quality Investing for the Long Run. Discussing timeless strategies to build wealth and secure your financial future, even in a volatile market. Whether you're a beginner or an experienced investor, you'll gain actionable insights into long-term investment planning, portfolio management, and how to stay the course in an ever-changing financial landscape. Don’t miss out on this opportunity to learn from two experts who have navigated the ups and downs of the market for years.

Mike Tyson, known for his ferocity in the ring, once famously said, “Everyone has a plan until they get punched in the mouth.” This truth resonates deeply in our personal and financial lives, where unexpected challenges can quickly derail our best-laid strategies. At Baskin Wealth Management, we understand that true financial stewardship goes beyond investment advice; it’s about being a steady support during life’s unpredictable moments.

As we look back on a summer filled with its share of challenges, from rising costs to social unrest, it's easy to get swept up in a sense of discontent. But as Thanksgiving approaches, it’s important to pause and reflect on the many things we can still be grateful for as Canadians. Despite the obstacles we face, we continue to enjoy longer lives, greater wealth, and one of the safest, most educated societies in the world. So, while there's much work to be done, let's take a moment to appreciate all that is going right.

In this month’s newsletter, David addresses a question many of you have asked: How might the upcoming U.S. elections impact financial markets? While the election season stirs plenty of headlines, historical data shows the stock market tends to be more stable than we might expect, even in election years. Interestingly, if an incumbent party loses, the market sees a positive boost in the short term. As long-term investors, we focus on company performance and remain confident that quality companies will thrive, no matter the political outcome.

We’ve seen it all in the finance world – from the 1987 Black Monday crash to Nvidia’s meteoric rise in 2024. Here’s a golden nugget: fear trumps reason and trying to time the market is a sure way to give your money to the taxman. Remember, envy and greed can lead you astray, and sometimes doing nothing is your best move. Diversify like your wealth depends on it – because it does!

Now that hockey and the Blue Jays are done for the year, Canadians can return to a discussion of their favourite topic - real estate. The cost of shelter, be it buying a house or a condo, or renting a property, is very high. For the younger generation, they are wondering whether they can afford to buy while for those in the later stage of life, the question is whether to stay in their family home, buy a smaller house or condo, or perhaps rent. In this months newsletter, David focuses on the latter scenario, outlining some of the pros and cons of the different options.

In this months newsletter, David discusses how the pandemic has reshaped the commercial real estate landscape. From abandoned office buildings to repurposed spaces, city cores have been transformed and how and when this will be resolved is unknown. This completely unexpected turn of events, along with a number of other pandemic related investment trends that came and went, reinforced how complex markets can be from which he concludes that investing is about looking for quality, not headlines.

"One Up on Wall Street" by Peter Lynch advocates for the investment strategy of buying what you know, emphasizing personal observations over traditional financial analysis. David’s newsletter discusses how Canadians tend to invest heavily in domestic companies due to familiarity, despite the risks of home market bias. He highlights the under-performance of the Canadian equity market compared to global markets, attributing it to factors like scale, sector concentration, and lack of international investor interest. Despite these challenges, there are reasons for Canadians to hold domestic stocks such as tax benefits and currency risk mitigation. At Baskin Wealth Management, we will always be investors in Canadian stocks but we have been increasing investments in non-Canadian stocks.

In this month's newsletter, David runs some experiments using Microsoft's AI tool - Copilot - to better understand what it is and isn't capable of. He starts with a basic question, to which it provides a pretty good answer. He then asks if Copilot is good at picking stocks. For David, the answer demonstrated that while Copilot has plenty of knowledge, it lacks wisdom, an essential ingredient in making decisions in the markets where there are large numbers of somewhat irrational humans involved.

Spring has arrived, ushering in the annual ritual of filing income tax returns. This is a process marked by the increasing complexity of the Canada Income Tax Act to which the Government has responded by hiring at a rate exceeding that of the general population by almost 4-fold over the past 10 years. Unfortunately, this is not isolated to CRA and is symptomatic of declining productivity across the country. In this month's newsletter, David discusses how this impacts growth prospects for Canada and how we are addressing it in client portfolios.