Market Musings March 2025

Dear all,

Where to begin... so much has changed in the world since the last time we wrote to you. Every time we started a text that we thought was timely, it immediately became obsolete due to the incessant flow of news.

On the American side:

Swearing-in of President Trump three days after the launch of his own cryptocurrency ("Meme coin") and then that of his wife Melania.
A flood of presidential decrees and executive orders, some of which are out of the ordinary, to say the least (banning of paper straws???).
Creation of "DOGE", the Department of Government Expenditure Reductions headed by none other than Elon Musk.
Threats of new tariffs of 25% on Canada and Mexico and an additional 10% (30% total) on China.
Postponement of tariffs on Canada and Mexico.
New tariff threats, followed by another postponement (is it an infinite loop?).
Tariff threats to India and the European Union (and the entire planet?).
Elon Musk being Elon Musk on several occasions (do we need to give examples?).
A bad joke from President Trump that Canada would become the 51st American state, which turned into a friendly threat or a formal offer, or simply a bad joke that lasted way too long.
Real threats to Panama and Greenland, again directly from President Trump.
Meeting/intimidation of Volodymyr Zelensky in the Oval Office.
Controversial cabinet appointments (a recognized anti-vaccine advocate as Health Secretary and a television host as Defense Secretary).
Creation of a national cryptocurrency reserve in the United States.
So many bizarre quotes from President Trump and less than two months have passed since his swearing-in.

On the Canadian side:

Resignation of Prime Minister Trudeau in the wake of the tariff war and following some direct insults from Elon Musk and President Trump. This was followed by the appointment of his successor, Mark Carney, former Governor of the Bank of Canada and the Bank of England.

How to keep a cool head amidst this news frenzy? Volatility is never comfortable, and this latest round is no exception. As the news cycle heavily revolves around uncertainty related to tariff hikes, panicked headlines may have you feeling apprehensive and uncertain. Due to the recent market fluctuations, a number of our clients have reached out for perspective – often wondering whether they should adjust their investment portfolios.

In our combined years of experience, we've seen these market swings happen time and time again. Pullbacks and corrections driven by economic and global events are not unusual and ultimately help sustain a healthy market that, over time, typically will experience positive growth. It is important to maintain perspective and stay focused on your personal long-term objectives to avoid making decisions based on every twist and turn in the market.

That being said, every crisis comes with its particularities, and not acting at all during the Dot-com bubble in 2000 or the Great Financial Crisis in 2008 would have resulted in staying invested in companies that were once considered blue chips but either ceased to exist or are still much cheaper today than they were back then (Nortel Networks in 2000, or Citigroup in 2008… the former went bankrupt and the latter is still down 87% from its 2007 high). While the investments we select for your portfolios are chosen for their long-term potential, we constantly monitor your investments to make tactical changes when needed. We did make some adjustments to the portfolios in the wake of the recent political situation in the USA, and this one might interest many of you for multiple reasons. When Elon Musk started to diverge again from what he is good at (launching and managing companies with amazing growth prospects) to take a quite radical and controversial political stance (risking and ending up being boycotted by his consumer base as the latest vehicle sales numbers worldwide confirm), we started trimming our Tesla exposure quite radically. We sold a large part in December, followed with two more sales in January and February*, leaving only a small exposure in the portfolios. We think this may comfort some of you since this company has been top of mind with clients of late.

Having concerns when volatility affects your portfolio is totally normal. This is why we emphasize the importance of a tailored financial plan focused on long-term financial goals. Over time, dips such as these should feel like mere bumps in the road.

As your advisors and portfolio managers, we are here to provide you not only with insight but with advice on how we can help manage the effects of – and capitalize upon – the market’s movements. We are watching the markets closely and will reach out should anything require immediate action. In the meantime, please feel free to get in touch if you’d like additional perspective or guidance.

As always, thank you for the trust you place in us and our team,

Erik and Guillaume

*Please note this may not have impacted you if, for some reason, you had no or only a very small Tesla exposure, or inversely if your Tesla shares were not held in a discretionary account.

Disclaimer

Erik Moisan and Guillaume Desjardins-Tessier are Portfolio Managers with Raymond James Ltd. The views are those of the authors, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member - Canadian Investor Protection Fund. Commissions, trailing commissions, management fees and expenses all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

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