April 2025: the tariff shock

You'll remember the announcement of U.S. tariffs in early April 2025. In just a few sessions, the S&P/TSX Composite Index fell 10% and the S&P 500 fell 11.5% (between the April 1 close and the April 8 close, 2025). The headlines and the repeated narrative spoke of high inflation, recession, broken supply chains, the end of North American trade integration.

Many investors did what fear commands: they reduced their exposure, waited to "see things more clearly," held cash while the dust settled. New York strategist Tom Lee, of Fundstrat, explained as early as January 2026 that, even though the indices had rebounded strongly as soon as May, most investors had posted a lacklustre performance in 2025. Not us.

2026: and it wasn't over

The start of this year was no more reassuring. From late February, the conflict in Iran and the disruptions in the Strait of Hormuz caused what the International Energy Agency called the largest supply disruption in the history of the oil market. The indices fell once again.

Once more, the market moved through the situation, well supported by companies that kept improving their profitability — through the tariffs, but also during the war in Iran.

And as if the war weren't enough, we are also back to square one on the trade front: the August negotiations settled nothing.

All of this to say that when you look at your portfolios, your performance has nothing to do with the bad news being reported.

As an example, an important holding of ours, Cenovus (CVE), took full advantage of the insecurity caused by the war in Iran to rise 91% year to date*. Yes: 91% in eight months. The same is true of Baytex, which we had taken advantage of on the way down to buy back at a low price in 2025, and which we largely sold in 2026, up 52% in 2026*.

This is not to say the bad news was false. It was true, and it caused real damage — to lumber, to steel, to specific Canadian companies. But diversification and security selection made all the difference. Another example: our structured note on the Canadian banks (RBC10900) gained 26% in eight months*.

Of course, we don't bat a thousand, and some holdings lagged in 2026 — Dollarama (−14%) and AtkinsRealis (−5%)*. The goal is always to have more winners than losers, and for the winners' gains to far exceed the losers' losses.

What these eighteen months teach is that a piece of bad news, even when true, is not necessarily a reason to sell. By the time it makes the headlines, it is already in the prices.

This reminds me of years ago. In 2008, I gave talks with a slide that listed, over fifty years, every good reason not to invest — that is, every piece of bad news. Then I showed the chart of a long-term stock market index. The rest is history.

What comes next

A few remarks, and none is a forecast.

The trade tensions between Canada and the United States are not resolved, and there is no reason to believe they will be resolved cleanly. The conflict in Iran remains open and oil stays sensitive to every headline: let's not forget this war has been "won" more than two hundred times and a deal is announced every week. I'm barely exaggerating.

Nothing above will repeat in the same way. So the only question worth asking today is not "what's coming next," but: is my manager on top of what's happening, and actively managing my portfolio to benefit from it and protect it?

My answer to that question, when my clients ask me: Certainly.

What matters most is to follow the facts — not the stories — in real time, and to adjust our exposures according to what experience and competence dictate.

I'm very fond of this line from the book The Lion Tracker's Guide to Life: "I don't know where I'm going, but I know exactly how to get there." I don't track lions, I track the market: I move forward by following the signals and adjust as I go to keep the best possible positioning.

With that, have a great month of September!