Welcome to 2025! A Reset for New Opportunities and Personal Achievements
Prior to Christmas, I was pleased to continue with platinum level sponsorship of the Christmas Exchange Breakfast. This year’s event was held at the Infinity Center where together we raised a total of $150,000 to assist those in need over the holidays. Disadvantaged families and especially children really benefit from this long-standing charity event, and I am happy to continue the level of support Michael set in place years ago.
On a personal note, I was fortunate enough to spend my Christmas in Panama City with Michael and Audrey. I really enjoyed my visit and can understand why they enjoy residing there. I was able to dine in some fantastic restaurants located in the historic district, Casco Viejo, visit the Miraflores Locks on the Panama Canal, the Canal Museum, Bio Museum and so much more. Although it was a busy week, it was a nice chance to escape to some warmth, learn about the history and sights Panama and of course spend time together with my parents. I was surprised by the number of Canadians I met and look forward to returning when I have some more time and can explore the interior and coastal areas.
Speaking of exploring… we do that a lot of that here at Prittie Private Wealth. We spent time in 2024 analyzing the risks and rewards of new opportunities that present potential value for those who can accommodate greater potential volatility but the rewards that may also bring. This brings us to Small Modular Reactors (SMR’s) which are in the news with growing frequency. This is due to the massive demand for power emanating from data centers, crypto production and soaring AI usage. We have two names in mind – one a large well-known name and one a newer entrant. As some of you may know, I find the rising interest in nuclear energy very exciting, and it opens up new frontiers for clean energy, but also for Canadian uranium production and technological advancement. We have all witnessed the rise of Crypto and how it has morphed from an outlier and seemingly sketchy form of payment to an acceptable payment method for many items and an emerging, but accepted, asset class. There are several governments around the world now accepting crypto and securities regulators, such as the US Securities and Exchange Commission gave the green light to allow Exchange Traded Funds (ETF’S) to offer Bitcoin and Ether. Many proposed gold or silver over the years as a hedge with say a 5% allocation. We have that where prudent in a number of accounts especially over the last few years to help combat inflation. However, gold does not produce income – it’s a hedge and a preserver of capital. Pure Bitcoin or Ether offer growth in price and some of the crypto ETF’s offer some compelling income yields. Again, these should never be confused or compared to a government bond or another historically safe income producing investment. The thought for many is that Bitcoin or another mainstream variant be used as a sliver in the growth silo. As America seems poised to adopt the currency in greater quantity, we support prudent, judicious inclusion for those clients who are open to the opportunity. We will provide more information on this in the months ahead. Finally for this reading, Artificial Intelligence is another space poised for interesting developments. It is growing so fast and while we want to be part of the growth, we won’t buy into companies at ridiculous valuations either. We are being judicious with your capital whilst cognizant of the need to have a presence where possible. Again, too much of anything can bring an uncomfortable feeling, so balance and proper portfolio modeling is key to ensure the outcome matches the objective – and not all client objectives are the same
There are headwinds swirling as well, and while diversification is always wise, it’s especially so now. You will be pleased to know how much foreign content benefited you when you learn the Canadian dollar declined 8% this year. It’s down 20% over the last decade. This is going to hurt everywhere and if tariffs are imposed on Canada and a trade war breaks out, it will get worse. Of course, right now we have a government in turmoil making us that much more vulnerable. Stock markets worldwide despise uncertainty and we need certainty here and an election seems imminent –and if so, likely an end to the much maligned 66% capital gain inclusion rate. Consider further a $500,000 Canadian based account lost ~$40,000 in global purchasing power in 2024 – from currency devaluation alone and in addition to what inflation ate away. This is why my predecessor and I are keen on foreign investments that are in USD, Euros or even Swiss Francs as a protective hedge. Once again, Canada’s benchmark, the S&P TSX underperformed relative to America’s S&P 500. This is why having investments in global provide the opportunity for superior growth and a currency hedge against a falling Loonie. Yes, the BRIC community is making noises about pulling trade settlement away from the US currency, however it’s hard to imagine that taking hold anytime soon. The United States makes up 59% of market capitalization globally – a huge number. We would be foolish to count them out in favour of BRICS. Further, companies that are multinational conglomerates are global in reach. They derive income from all over the world, often in multiple currencies and Canada just does not have those opportunities. We have some great ones, however, most of our economy is comprised of financials and resources, not businesses with massive global reach which limits our markets to an extent.
We need to follow where money is being allocated on the global stage. Capital has left Canada for a number of reasons and we need to be certain we are where the opportunities are. While we will always have Canadian exposure, especially in income-oriented investments, we cannot afford to sit on the sidelines waiting for homegrown opportunities that are present elsewhere.
Wherever 2025 takes us, wealth is created over time. While we manage our side of the equation, it is important to recall the tenants of wealth creation. That being, Time, Return, Taxes and the emotional ability to stay invested through tough times. Take a look at Michael’s article for an interesting statistic on this point that once again proves “crisis = danger + opportunity” and all broad-based market declines are indeed temporary and a huge opportunity at the time they occur.
Finally, but very important to me, thank you so much for embracing me in 2024 and for your continued confidence in me and my team. Thank you to all of you who both read and congratulated me for my recent award from Manage HR Magazine. I was proud to be recognized as one of the “Top Retirement Planning Services Providers in Canada for 2024”.
Article: https://www.managehrmagazine.com/magazines/December2024/Retirement_Planning_Services_Canada/
I wish to share this recognition with my team and I would like to take this opportunity to spotlight the exceptional efforts of my Client Service Specialist Team—Natalie Nunn, Anka Molon, and Alex McCallum. Your commitment to providing outstanding service and going above and beyond for our clients is both inspiring and integral to our success. Additionally, I want to recognize the invaluable contributions of our Professional Collaborators, Lisa Bailey and George Comminos. Your expertise and partnership continue to elevate our work to new heights, and it’s a privilege to collaborate with you.
I look forward to speaking with you all in the months ahead and ensuring we do all we can to both understand, internalize and do our part to achieve your individual financial and life goals.
Sincerely,
Adam
