Given the recent tariff-driven market mayhem, we wanted to take a moment to share our take on what's happening, how we're positioned, and where we’re headed.
For years, we've been discussing the structural changes unfolding in global markets at OUTLOOK. What we’re saying now is simply a continuation.
At OUTLOOK 2025, we highlighted last year’s extremes, excesses, expensive and unprecedented concentration (U.S. market represented >71% of the MSCI World Index by March-end), and highest foreign investment in the U.S. market — with outflows to Europe and Asia starting to show the cracks in February. The unveiling of Deep Seek was a turning point. Tariffs served as the next catalyst.
We’re witnessing the monumental structural transitions we identified in OUTLOOK 2019 — The Next Decade taking place at a rapid pace. Two key trends we’ve been expanding on in 2024 and 2025 are:
These shifts are not mere staging posts — they’re expected to be the most disruptive forces of our lifetimes. Their scale and duration far exceed those of typical economic cycles, representing a permanent change that will reshape the global landscape for generations to come.
New innovations or technologies can radically transform existing industries, challenging or replacing established players or products. These disruptions change the way things are done, creating entirely new markets or ways of thinking. For example, the rise of smartphones disrupted the mobile phone industry, and streaming services like Netflix disrupted traditional TV and movie rental businesses. While these disruptions can be painful in the short term, they also create opportunities for innovation and growth in the new landscape.
We’re seeing the rapid acceleration of a new world order and the necessity for new trading alliances. After the U.S. election, markets initially responded positively, anticipating tax cuts and a more business-friendly regulatory environment. Tariff talks were mostly centered on China and whether the new administration will choose to confront, cooperate or compete with the world’s second-largest economy. But that all changed when Trump imposed tariffs on America’s allies, and now the rest of the world. The impact was decisive.
Global stock markets experienced a sharp downturn on heightened fears of recession and an economic collapse on a scale reminiscent of 2008. One of the most alarming aspects of this “correction” was its speed and severity. The S&P 500 plunged 10.5% in just two days. Historically, such steep declines over consecutive days have only occurred three times since 1952: in October 1987, November 2008, and March 2020. In each case, these sharp declines marked the early or middle stages of major bear markets in the U.S. Trump’s tariffs will be the biggest tax increase since the 1960s, possibly even World War II, representing an estimated fiscal tightening of 1%-3% of U.S. GDP.
We’re not surprised by the current commotion. Trump has said from day one that tariffs would bring short-term pain. What gets lost amid the noise is the U.S.'s massive and unsustainable deficit, along with his aim to rectify it.
In the short term, capital could face downward pressure. That’s why it’s crucial to stick to the basics: it's not just about time in the market, but about what you pay. The price you pay at the time of purchase plays a crucial role in determining long-term success.
The current environment is filled with uncertainty around trade policy and the potential for prolonged geopolitical and economic disruptions. It’s unpredictable. If we look back to the 1973-74 bear market, it lasted 90 weeks — a slow bleed. In contrast, 2020’s downturn was much quicker, lasting just a month. Each bear market is different, and conditions may evolve in unexpected ways. We cannot underestimate the current administration’s transactional approach. For Trump, it’s about the best deal. America First. He’s moving fast and breaking things. We are witnessing a once-in-a-lifetime event. While it’s normal to feel scared, it’s during times like these that we must stay the course and keep emotions in check.
We remain committed to evaluating every single position carefully, monitoring global markets for potential breakthroughs. As we’ve said before, we are preparing for — not predicting — the future by focusing on what we can control: building a diversified portfolio of high-quality companies.
We’re pleased to report that, despite recent turbulence, the portfolio has held up relatively well. The average portfolio yield across accounts currently stands at 4%.
Some of our thoughts:
Where are we going?
As you start to see a rebound in many of the indices, don’t be fooled. This is standard human behaviour. These are structural, global transitions that many of us have never seen before. Actively managing diverse portfolios while continuing to collect yield and avoid pitfalls will be imperative to success.
As always, we appreciate your continued trust. Rest assured that we are monitoring all market developments and staying focused on navigating this environment thoughtfully on your behalf. If you have any questions or would like to discuss your portfolio in more detail, please don’t hesitate to reach out.