July and Mid-year Update
We’re halfway through 2025, and it’s been eventful, to say the very least. We’ve seen everything from trade wars to real wars and had flare-ups and resolutions to both over the months. The markets have moved with these, and we’ve seen significant volatility over the first six months. At this point, the latest announcements have tariffs to be instated on August 1st. Given the events of the past six months, it’s fair to say that we don’t know whether these tariffs are going to be implemented, and we’ll have to see what happens. President Trump said there would be no extensions and tariffs would begin to be collected on that date, but you can probably forgive me for being skeptical! William Goldman once said, “Nobody knows anything...... Not one person in the entire motion picture field knows for a certainty what's going to work. Every time out it's a guess and, if you're lucky, an educated one.” That quote couldn’t be more appropriate for the world of finance and investing, and is perfect for the current situation with the US President.
The first half of the year has seen a lot of volatility in the fund, but we are back on the positive side of the ledger for 2025, and I think we are well-positioned for the coming months. We’ve added some positions through the first half and changed the fund's composition to adapt to the ever-changing environment. The summer months tend to be a little slower on the markets, which is likely the case this year despite the resurfacing trade issues. I’m watching this, and if we see some increased volatility, specifically a negative impact on things because of the tariff and trade issue, I’ll be searching for opportunities. In these periods, it can be common to see some bargains on companies that are relatively unimpacted, but caught in the crossfire, so to speak. We added some of those names this spring and will continue to add to those positions. We will look at other opportunities as they arise.
From a Canadian perspective, one interesting thing that stood out in the recent trade report is the expansion we have seen with markets other than the US. Our overall trade deficit narrowed from $7.6 billion in April to $5.9 billion in May, which was impacted by exports to countries other than the US. Those exports reached a record high in May, and given the continued issues with US trade, that can only be seen as a positive. I think it’s important to say that while the US will always be our largest trading partner, and there is no doubt about that, we need to explore these other markets and increase our trade with other countries.
So, here we are, about halfway through the year, with a lot of news and factors to consider. There have been huge moves up and down over these six months, and we’re largely right back where we started on the broader stock markets. I don’t want to suggest that this is much ado about nothing, but there is a lesson here not to get too excited about the short-term, day-to-day fluctuations in the market and instead focus on the long term.
Until next time,
Vic
