It’s tough to believe we are already past the midway point of January, time certainly does fly. We trust your start to 2025 has been good and we look forward to the opportunity to continue to build on the great work we’ve done together in what promises to be an eventful year.
The past five years have been nothing short of extraordinary, each marked by unique challenges and opportunities. From the pandemic and its far-reaching impact to the inflationary pressures that followed, these years have shaped the global financial landscape in remarkable ways. In 2020 and 2021, we witnessed unprecedented policy responses to the pandemic, setting the stage for rapid change. By 2022, as the world reopened, inflation shocked markets, leading to a difficult year with double-digit negative returns across both equities and bonds. While the first half of 2023 felt much the same, the gradual normalization of inflation sparked a late rally in risk assets, paving the way for what turned out to be a standout year in 2024 for nearly all asset classes.
This past year was the second consecutive year of a +20% return for the S&P 500, largely due to the tremendous growth of a small group of high growth technology names. Although history is not necessarily indicative of future returns, it is interesting to note that In instances where the S&P 500 posted total returns of more than 20% for two consecutive years, the third year has averaged a modest 7.3% advance but still boasted a 70% likelihood of a positive outcome.
With valuations now elevated, portions of monetary policy tightening behind us, and credit spreads tight, we may need to temper expectations for the years ahead. At Boschman Wealth Partners, our approach to investing embraces the complexity and uncertainty inherent in markets. We focus on rigorous research, thoughtful portfolio construction, and disciplined risk management. We anchor our decisions with long-term capital market assumptions—while remaining tactical in a risk-controlled manner.
As we step into 2025, one of the immediate challenges lies in the concentration of today’s markets. Momentum-driven rallies often conclude abruptly and we continue to be prudent with the investment decisions that are made in our portfolios. Given the current economic and political landscape there is an increased probability that market volatility returns to “normal” in 2025. 2024 saw very few bumps in the road and produced consistent positive monthly returns. The smooth path experienced in 2024 is not to be expected going forward. The below chart articulates how volatility is “normal” and to be expected. As you may have noticed we have already experience this throughout the start of 2025.
However, with volatility comes opportunity. By diversifying portfolios away from concentrated areas—be it by geography, sector, or individual securities—we can uncover value and manage risk effectively. We anticipate a number of opportunities will present themselves in 2025, driven by short term uncertainty and political agendas/promises. It is our intention to be tactical within our portfolios and look for tremendous value during these times.
In the weeks ahead, our team is conducting interviews with various portfolio managers and analysts to gain their perspective and insight. You will likely see continued video blog posts so please don’t hesitate to check out our website (Team | Boschman Wealth Partners of RBC Dominion Securities) from time to time.
Thank you for the continued trust you have placed in us to manage your family's wealth and overall financial planning strategies.
All the best in the year ahead!
We would be happy to have a conversation with anyone that is important to you, regardless of whether or not our team would be a fit for their financial situation. We will always ensure that they are taken care of, whether it is us or another of our partners. In our experience, the most successful introductions come from a short email connecting our team with a friend, co-worker, or family member, and then we can take it from there.
