January 2026 Update
Hello everyone, and happy 2026! The past year was both positive for investors and sometimes chaotic. At this point, early in the new year, it would seem like we’re in for more of the same.
Before I delve too deeply into this update, I would like to inform everyone that I will be away from February 14 through March 1. I know that sometimes you receive an out-of-office reply stating that people might not access emails, but they might still check and respond. Please be aware that during this period, I will not have my phone with me and will not be reachable. You can still manage your accounts and contact Joan during this period for any issues. Meagan can also assist you with specific trades or transactions that require attention. If you would like to discuss things ahead of that time, please reach out, as I am more than happy to have conversations or meetings. The RRSP deadline is March 2, and I want to make sure that everything runs smoothly in my absence.
2025 saw positive returns on the major stock indexes, and the Orion fund was no exception. We closed the year up 16.7%. The year was tumultuous, and from the April lows, we saw significant gains in the markets and in the fund. This was the first year that we lagged the TSX, and the gains there are largely due to the run-up in gold prices, primarily in the materials and mining sectors. In looking ahead at 2026, I would have a hard time seeing a repeat performance for the Canadian markets. For the fund, we are now compounding at over 20% for the past two years, and those kinds of gains are excellent in a historical context. Remember, this is a medium risk mandate! Since inception, the fund has compounded at 11.64%.
Starting off 2026, there are several significant geo-political issues. We’ve all seen the issues with the US and Venezuela, with threats against some other countries and of course the lingering issues regarding Greenland. From an investment perspective, this really hasn’t been a factor on the markets. Even in the case of oil, we haven’t seen significant moves, although Canadian energy did see a decline right after this action. In my opinion, the move down for Canadian energy after the Venezuela issue, was an overreaction. It’s not that there would be no long-term impact on Canadian energy if Venezuela were to begin producing again, it’s that this impact is at least several years and billions of dollars away. In other words, this decline seems premature and a lot could change before that oil really hits the market.
Traditionally, the markets haven’t reacted significantly to geopolitical issues. We often see a move, which kind of washes away over 6-8 weeks. That’s the broader market reaction though, and in one instance today we could see a significant impact. This weekend, the US has asserted that they will take Greenland, either “the easy way or the hard way”. The impact here is undeniable. It could well mean the dissolution of NATO, or the exit of the US from NATO. Germany (in particular) has pledged that they will increase armaments and help keep Europe safe. Pretty clearly, I am watching these developments carefully, because this could have an enormous impact globally.
In Canada this year, there are several things that we need to keep an eye on. The first is that we have the ongoing issues that are hurting the steel, aluminum, lumber and auto sectors. The federal government is trying to provide supports here, and also looking to spur some projects and improve the domestic market for these products. The other angle that the federal government is taking, is to expand trade and trading relationships with countries other than the US. Of course, the other major topic this year, is the renegotiation of CUSMA. It’s impossible to know how this will go, but trade negotiations overall seem to have been rocky over the past year with the current US administration.
As far as the start to 2026, things have started well for the fund. We have some holdings that have been very good so far. January can have some interesting stock market implications for investors. One school of thought is that there is a so called “January effect” where the month is one of the better months for the market. This could be because after people return from holidays, they could be buying after selling stock losses in December. Another effect is the “January Barometer”, which is basically that as January goes, so goes the rest of the year. While I don’t really follow these things, and think they’re kind of hit and miss, this barometer has been accurate about 89% of time. Lastly, for the other side of the coin, this is the second year of the presidential term in the US, and this is traditionally the weakest year for the market. Later this year we’ll see the midterm elections in the US, and can create a “wait-and-see” approach as investors want to see how things come together before they make bigger decisions. I don’t like to talk about politics in these videos, but I think it’s fair to say that many people around the world are going to be watching November 3rd keenly. There is a lot that can happen before we get there, though.
Until next month,
Vic
