2025 Year in Review

To the best of my knowledge, NO market forecasters anticipated Canadian and International stock markets leading global performance in 2025, surpassing the strong U.S. market. Yet despite tariffs, unresolved trade concerns and no shortage of alarming headlines, markets once again defied consensus. The TSX surged roughly 30% driven by strong contributions from gold producers, Canadian banks and natural gas companies. The S&P 500 delivered a solid 16.87% return measured in U.S. dollars, its third consecutive year of double-digit gains, powered in large part by continued momentum in Artificial Intelligence (AI), particularly data storage and memory-related companies. International stock markets had a stellar year, rising more than 21% led by emerging markets such as Colombia and South Korea, improving European economies like Spain and Italy and AI-driven technology growth across Asia, including South Korea, Taiwan and Japan. Canadian bonds, while less exciting, played their role and delivered a modest but stabilizing return of approximately 2.64% for the year.

Maintaining discipline throughout 2025 played a crucial role in delivering your portfolio’s solid results. In real time, we worked together to reinforce the important distinction between thoughtful portfolio adjustments driven by changes in personal circumstances and hasty reactions driven by unsettling news. The former is prudent financial planning; the latter more closely resembles speculation/gambling. As always, our focus remained on protecting and advancing your long-term goals, not responding to daily market noise. With that in mind, it is worth restating the enduring principles that continue to guide our work together.

Guiding Principles

• The economy cannot be consistently forecast, nor can markets be reliably timed. History shows that the highest-probability method of capturing long-term stock market returns is to remain invested through frequent, sometimes significant—but historically temporary—market declines.
• Human nature struggles mightily with uncertainty. Left unchecked, it repeatedly leads investors to sell during periods of fear and chase performance during periods of enthusiasm. Long-term success depends far more on behavior than on prediction.
• We are long-term, goal-focused, plan-driven investors. Our portfolios are broadly diversified across global markets and thoughtfully tilted toward areas of higher expected long-term return (less expensive small and mid sized companies), rather than concentrated bets on the latest narrative.
• As long as your long-term goals remain unchanged, our plan for achieving them remains unchanged as well.
• The long-term premium that stocks provide over bonds and GICs is essential to achieving meaningful financial goals. That premium can only be earned by enduring uncertainty along the way.
• Diversification remains the most reliable defense against the inevitable economic and financial storms that arrive without warning.
• Bonds continue to play a vital role in providing stability and liquidity, positioning portfolios to take advantage of market dislocations rather than be harmed by them.

These convictions remain the bedrock of our investment philosophy and will continue to guide us going forward.

Current Commentary

• One of the most important reminders from 2025 is that the stock market is not the economy. Markets reflect the value of publicly traded companies and are inherently forward-looking. They often move independently of current economic data, political rhetoric, or public sentiment. We saw this clearly during the U.S. tariff disputes, where economic anxiety ran high even as Canadian equities significantly outperformed.
• AI has continued to generate exceptional returns (and headlines!) in recent years, and your portfolios have benefited from this trend in a measured and disciplined way. Rather than concentrating exposure in a handful of popular stocks or sectors, we continue to prefer capturing innovation through globally diversified portfolios. This approach allows us to participate in technological progress while avoiding the risks that come with overconfidence and concentration. As we often say, we will never own enough of any one thing to make a killing in it but we will also never own enough of any one thing to get killed by it.
• Volatile periods like April in 2025 also reinforce an uncomfortable but essential truth. As Voltaire observed, “Uncertainty is an uncomfortable position. But certainty is an absurd one.” Markets reward investors who can accept uncertainty, remain patient, and stay disciplined when clarity feels elusive.

As we look ahead, uncertainty will no doubt persist in markets, geopolitics, and economic policy. That has always been the case, and it always will be. What changes outcomes is not certainty, but preparation: a thoughtful plan, a disciplined investment approach, and the ability to stay the course when emotions run high.

Team Update: The IAG acquisition of Richardson Wealth successfully closed on October 31^st and it is business as usual. We are looking forward to learning more about their enhanced client digital experience tools. Matt is attending a special IAG advisor conference in Montreal at the end of January to learn more. Amy celebrated a “milestone” birthday in 2025 and spent time with close friends in Playa del Carmen in April to celebrate the event. She also visited Colombia, Australia and Mexico City in 2025. From a work perspective, she continued to be our trusted “air traffic controller” and attended her first ever business trip! Amy and Tim attended the Richardson Wealth conference in Banff in September where Amy had additional responsibilities as a key member of the associate advisor steering committee. Matt obtained the “Investment Advisor” title while simply making official what had been true for a long time. Matt deviated from golf and entered a pickleball tournament with his mom where they made it all the way to the quarter finals! Be sure to ask Matt about his golf round with PGA star Akshay Bhatia in Jupiter! Phil and Azze both continued to progress and take on larger responsibilities after two years with our team. Azze is enrolling in the Canadian Securities Course to obtain her securities licensing this year. Phil is becoming more actively involved in our client’s wealth planning process. He enjoyed time off in Jamaica last year for bridal party responsibilities. Azze had volleyball in NYC last year and a family trip to visit Salvation mountain and the Salton sea.

As we always say—but can never say enough—thank you for being our clients. It is a genuine privilege to serve you and to be entrusted with such an important role in your financial lives. Please don’t hesitate to reach out if you have questions, concerns, or simply want to revisit your plan as we enter the new year.

Regards,

Tim Pritchard FEA
Senior Wealth Advisor & Senior Portfolio Manager
Tel.: 416.969.3195
Tim.Pritchard@RichardsonWealth.com

Visit www.PritchardWealth.ca