Why Things Feel Different (and What We’re Doing About It)

Every February brings Groundhog Day — and for markets,  this year is no different.  

1. U.S. stocks are increasingly concentrated

For some time, a small number of large companies and sectors have done most of the work in the U.S. stock market.  Today, just two sectors — technology and communications — make up more than 45% of the S&P 500, the highest level of concentration in over 20 years. That doesn’t mean these companies are “bad.” But it does mean investors are increasingly relying on a very narrow part of the market to deliver results.

What I am seeing now:
Markets tend to rotate. After years of leadership from large tech companies, money has slowly been moving towards smaller and mid-sized companies and more diversified strategies.  This is referred to as 'broadening' and historically, it is a healthy setup for longer-term investors.

2. Why gold (and other metals) are attracting attention

Gold prices have reached new highs, and other precious metals like silver and platinum have also moved up. This tells us the demand isn’t about one metal — it’s about the bigger picture.

What’s driving it?..... Central banks have been buying more gold since 2022, reflecting growing caution around holding foreign currencies (specifically the USD); Investors are looking for diversification as government debt rises and bond markets feel less reliable; Geopolitical uncertainty remains elevated.

An important question I hear is: “Isn’t gold expensive?” .... Maybe — but I think the better question is: what’s the alternative?  Stocks are expensive, especially in the U.S; Bond yields face upward pressure from rising government borrowing; The global economic and political backdrop feels less predictable than in the past. In that environment, precious metals often act as a pressure valve. My view is that pullbacks in gold and silver are likely to continue attracting buyers unless markets return to a more “normal” global backdrop.

3. What a changing world means for the U.S. dollar

Recent global commentary — including remarks by Mark Carney — point to something larger: the world order that shaped markets for decades may be changing.
For years, the U.S. benefited from the dollar’s special status. The rest of the world saved and invested in U.S. assets, allowing Americans to borrow cheaply and spend freely. That arrangement supported the dollar even during periods of stress.  Today, that system is under pressure with trade relationships are becoming more fragmented and countries rethinking their reliance on US assets.

What this means for investors:

Currency and asset diversification matters more with Canadian investors benefiting from selectively hedging U.S. dollar exposure and of course, as mentioned above, real assets and commodities are playing a more important role in portfolios.

Final thoughts
Markets are adjusting to a world that looks different than it did for most of the past 40 years. Concentration, geopolitics, higher debt levels, and shifting global relationships all point toward the same conclusion:
Diversification matters more now than it has in a long time.
As always, our focus remains on building portfolios that are resilient — not dependent on a single sector, theme, or outcome — and positioning you thoughtfully for what comes next.

If you’d like to discuss how these themes apply to your own portfolio, I’m always happy to talk