January 2025 Update 

Market Update 

Here is a recap of the most recent stock market performance: 

Year	Canada	US	Europe	Emerging Markets	World
2024	22.97%	25.08%	8.43%	13.70%	21.57%
2024 Q4	4.71%	2.79%	-2.81%	-4.24%	2.02%
2024 Q3	10.78%	5.93%	1.64%	6.77%	4.78%
2024 Q2	-0.85%	4.04%	1.24%	6.34%	3.18%
2024 Q1	6.92%	10.41%	8.43%	4.57%	10.22%
2023	13.31%	27.10%	15.04%	10.29%	23.75%
2022	-5.78%	-19.46%	-7.97%	-15.16%	-15.62%
2021	25.79%	26.97%	23.32%	0.14%	24.71%
2020	4.35%	21.37%	-1.71%	19.50%	14.06%
2019	22.00%	31.64%	24.57%	18.51%	28.07%%
2018	-9.04%	-4.50%	-10.02%	-9.72%	-6.86%
2017	9.22%	21.90%	13.72%	31.00%	19.13%
2016	21.15%	11.61%	7.90%	10.11%	9.65%
2015	-8.36%	1.32%	5.45%	-5.40%	2.65%
2014	11.43%	13.36%	5.22%	5.57%	10.40%
2013	13.58%	32.61%	22.26%	3.79%	29.57%

Source: MSCI gross returns including dividends, all returns in local currency, to December 31, 2024 

As January comes to a close, the Bank of Canada has just reduced its policy rate by another 25 basis points to 3% while the US Federal Reserve rate remains unchanged, resulting in a difference of more than 1% between them.  Potential tariffs loom, and with so much uncertainty, anxiety is running high for many.  So I thought it might be helpful to stop for a moment and take a breath, reminding ourselves of the principles behind successful investing.    

Investing for the long term requires a calm and disciplined approach, often in contrast to the emotional pull of current events and political headlines. Markets are inherently forward-looking, driven by a complex interplay of economic, social, and corporate factors. History shows that while political crises and scary events can cause short-term volatility, they rarely dictate long-term investment outcomes. To achieve lasting success, investors must maintain perspective, adhere to their investment parameters, and focus on fundamentals. 

1. The Market Absorbs Political and Economic Shocks 

Political developments, no matter how significant they seem, are usually transient when viewed through the lens of decades. For example, wars, elections, or economic downturns may rattle markets temporarily, but they seldom derail the long-term trajectory of economies or corporate profitability. Historical data underscores this resilience. For instance, the S&P 500 has delivered an average annual return of approximately 10% over the past century despite encompassing wars, financial crises, pandemics, and countless political upheavals. 

Markets tend to price in political risks quickly and move forward. Investors who panic and sell during periods of turmoil often miss out on the recovery that typically follows. Staying invested through uncertainty is one of the most reliable ways to capitalize on the market’s inherent resilience. 

2. Sticking to Investment Parameters Prevents Costly Mistakes 

One of the hallmarks of successful long-term investors is their steadfast commitment to their investment parameters. These parameters, which align with an investor’s goals, risk tolerance, and time horizon, serve as a guiding framework through periods of uncertainty. By adhering to a defined strategy, investors can resist the urge to react impulsively to market volatility or sensational headlines. 

Reacting to politics or frightening headlines often leads to impulsive decision-making. Emotional reactions, such as panic-selling during a market dip, can crystallize losses and prevent investors from benefiting from eventual rebounds. For example, during the 2008 financial crisis, many investors sold out of their portfolios only to miss the extraordinary bull market that followed. Those who stuck to their strategies, maintained diversification, and rebalanced their portfolios instead emerged stronger. 

By staying the course, investors avoid the costly pitfalls of attempting to time the market, which is notoriously difficult due to the unpredictable nature of outcomes. Adhering to investment parameters ensures that decisions are based on logic and long-term objectives rather than fear or speculation. 

3. Diversification Mitigates Risks 

A well-diversified portfolio is designed to weather various political and economic climates. By spreading investments across different asset classes, sectors, and geographies, investors can reduce the impact of localized or short-term shocks. For instance, during periods of political instability in one country, global markets and other asset classes often act as stabilizers. Diversification thus allows investors to remain committed to their long-term strategy without being overly exposed to any single risk. 

4. The Power of Long-Term Thinking 

Successful investing relies on patience and the ability to look beyond the immediate horizon. The headlines dominating the news cycle today are unlikely to have a lasting impact on a portfolio built for decades. Instead, focusing on factors such as company earnings, innovation, demographic trends, and technological advancements provides a more reliable foundation for long-term growth. 

For example, during the COVID-19 pandemic, markets initially experienced a sharp downturn as fear and uncertainty gripped the world. However, investors who remained focused on their long-term fundamentals and stayed within their investment parameters were rewarded as markets not only recovered but reached new highs within a relatively short period. 

5. The Importance of Emotional Discipline 

Emotional discipline is a cornerstone of successful investing. Fear is a natural reaction to uncertainty, but it is often an unreliable guide for financial decisions. Developing the ability to separate emotions from investment strategy helps investors stay the course during turbulent times. Practices like regular portfolio reviews, automated contributions to investment accounts, and reliance on professional advice reinforce this discipline. 

Crucially, sticking to a set of predefined investment parameters minimizes the influence of emotional decision-making. It ensures that even during volatile periods, decisions are grounded in the logic of a long-term plan rather than the whims of momentary fear or optimism. 

6. Opportunities Often Arise from Fear 

Periods of market turmoil, often triggered by political or scary events, can present some of the best opportunities for long-term investors. When fear dominates the market, high-quality assets frequently become undervalued, allowing disciplined investors to buy at a discount. This approach aligns with the principle of being “greedy when others are fearful” espoused by legendary investors like Warren Buffett. 

Investors who remain faithful to their parameters during such times are better positioned to capitalize on these opportunities. By focusing on long-term growth and not being swayed by short-term events, they can take advantage of market inefficiencies created by widespread fear or uncertainty. 

Conclusion 

While politics and scary events are an unavoidable part of life, they should not dictate your investment strategy. Long-term success in investing comes from maintaining a steady hand, focusing on fundamentals, and adhering to a disciplined approach rooted in predefined investment parameters. History proves that markets recover from crises, and those who stay invested are consistently rewarded. By tuning out the noise and committing to a thoughtful, strategy-driven approach, investors can navigate uncertainty and build lasting wealth over time.  I hope these thoughts are helpful as we head into a year that will no doubt be full of wild political headlines. 

As always, thank you for the trust you put in our firm. If you have any questions or concerns, please feel free to contact us.   

Sincerely, 

Anne Hammond 
BA CIM CFP CEA 
Financial Advisor & Portfolio Manager 
T 604 732 6551 

Planning Team 

Carly O’Connell, BA  Financial Planning Associate  Direct: 604-737-6752  [email protected]

Lorraine Watson  Executive Assistant  Direct: 604-737-6787  [email protected]

Anne Hammond is a Financial Advisor with RGF Integrated Wealth Management. The views expressed are those of the author and not necessarily those of RGF Integrated Wealth Management, which makes no representations as to their completeness or accuracy. 

© 2025 RGF Integrated Wealth Management. Ltd., RGF Wealth Management. Ltd., Member – Canadian Investor Protection Fund