In the last version of the Investment Outlook, we wrote about our investigation of stock market volatility. Last quarter was one of the more volatile periods ever recorded for stock markets. This, understandably, tends to cause investors concern. It is this fear (and greed) that results in excess trading and, in our opinion, is usually where most investors tend to make the biggest mistakes in their portfolio. Buying when others are selling, and selling when others are buying is the hardest thing to do in investing. It takes years of experience, a developed investment management process and a little luck to get it right. Experience and luck are hard things to manage. One just takes time, and the other is elusive (although some say that you create your own luck by being prepared).  We believe that we can create our own luck, which bring us to the second point: investment process. Without diligence, discipline and hard work, an investor has no bearing, no point of reference, no field of play where they can make an informed judgement. Stock prices go up, and stock prices go down.  Recently with the advent of technology, it all happens at blinding speed. Without a platform that one can trust, it becomes very difficult to make an informed decision on a consistent basis.

Let’s take a minute and list a few of the recent macro headlines: Inauguration of a new US Administration, U.S.–Canada–Mexico Trade War, global tariff escalations, “Liberation Day”, frequent Federal Open Market Committee (FOMC) Chair termination pressures, multiple warnings of correction risks & growth slowdown, DeepSeek, military drills around Taiwan, Israel & Iran war, the Straight of Hormuz threat, Russia & Ukraine war, rising geoeconomic fragmentation and most recently, decreasing geoeconomic fragmentation due to U.S.–Japan trade deal and potential whispers of an EU deal. All of this has created significant uncertainty. It is also essentially unprecedented … and this is only the last 6 months. By focusing on our process, we are able to tune all of this out. We don’t ignore it because it can ultimately impact the companies that we invest in. But we tune it out and instead focus on what is actually happening with economic data and in the companies that we invest.

An objective review of recent data would conclude that “the economy” is doing well, not perfect but well. Inflation data at the headline has been only moderately higher in both Canada and the US. The cost of housing has decreased significantly which has balanced against general goods inflation (linked to new tariffs). Tariff impacts have so far been generally underwhelming, either absorbed by companies or from price breaks at the foreign wholesale level. Furthermore, labour remains strong in Canada and the US, as is consumer sentiment and manufacturing & service expectations. While there is still the risk of quick deterioration in the future, at this point, we don’t see it in the data.

“This means that” we will continue this discussion next week after Fed Chair Powel speaks on the FOMCs rate decision, but we have to remember that the world pushes on, even with eye catching headlines.