Weekend Reading: Mid-Year Market Update
Exactly three months ago my Weekend Reading update was all about staying the course amidst a big stock market sell-off. I got into it with a bearish reader in the comment section who labelled my advice too naive as Trump set fire to long-standing alliances and global trade.
Well, well, well, how the turntables…
Zooming out, the first half of 2025 delivered another solid stretch for investors, building on the strong rebound we saw throughout 2023 and 2024. Despite ongoing concerns about global trade upheaval, geopolitical turmoil, and an AI bubble, markets have largely shrugged off the headlines and continued climbing.
To check in on how a diversified investor might be doing this year, I took a look at the performance of Vanguard and iShares’ all-in-one asset allocation ETFs. These ETFs come in a range of flavours – from conservative to growth-oriented – and offer a good proxy for how a typical hands-off portfolio might be performing.
Here are the year-to-date, 1-, 3-, and 5-year annualized returns for each ETF as of June 30, 2025:
Vanguard Asset Allocation ETFs:
- VCNS (40/60):
– YTD: 3.46% | 1Y: 10.60% | 3Y: 9.01% | 5Y: 4.91% - VBAL (60/40):
– YTD: 4.32% | 1Y: 13.26% | 3Y: 12.02% | 5Y: 7.87% - VGRO (80/20):
– YTD: 5.00% | 1Y: 15.76% | 3Y: 15.02% | 5Y: 10.83% - VEQT (100% equity):
– YTD: 5.87% | 1Y: 18.48% | 3Y: 18.09% | 5Y: 13.83%
iShares Asset Allocation ETFs:
- XCNS (40/60):
– YTD: 3.46% | 1Y: 11.07% | 3Y: 9.73% | 5Y: 5.49% - XBAL (60/40):
– YTD: 4.46% | 1Y: 13.23% | 3Y: 12.51% | 5Y: 8.26% - XGRO (80/20):
– YTD: 5.57% | 1Y: 15.92% | 3Y: 15.54% | 5Y: 11.11% - XEQT (100% equity):
– YTD: 6.43% | 1Y: 18.35% | 3Y: 18.43% | 5Y: 13.90%
As expected, the more aggressive asset mixes (like VEQT and XEQT) have posted the strongest returns over all time frames – especially with global equities continuing to power higher this year. But even the conservative portfolios are doing just fine, which is encouraging for retirees and anyone drawing down their portfolio.
This is your regular reminder that staying invested through ups, downs, headlines, and hype continues to be a winning strategy. You don’t need to predict what happens next – just keep showing up with a disciplined approach and let the market do the heavy lifting.
This Week’s Recap:
My latest net worth update had us oh-so-close to the $2M milestone, thanks to the strong market performance mentioned above.
I also wrote about mental accounting and how our money mind plays tricks on us.
Finally, a sober look at investing sensibly in your TFSA.
Switching over to MoneySense, I wrote about seven TFSA myths that refuse to die.
And, on Tangerine’s Forward Thinking blog, I explained how RRIF’s work.
Promo of the Week:
In my net worth update I casually mentioned that I’ve moved our kids’ RESP over to Wealthsimple. Now we have both our RRSPs and TFSAs, my LIRA, and our kids’ RESP on the Wealthsimple self-directed platform.
Moreover, our clients are loving the Wealthsimple platform as well. Whether it was an enticing transfer bonus, or they were just tired of getting nickel-and-dimed by the big bank platforms.
And I’m more apt to recommend it (especially for retirees) now that Wealthsimple has solved many of its early issues. They’ve expanded their account type offerings (family RESPs, spousal RRSPs, LIRAs, RRIFs & LIFs), improved customer support, and added neat automations such as recurring investment purchases and automatic dividend reinvestment with the tap of the app.
Why is it good for retirees? If you’re drawing down your RRSP and have not converted to a RRIF yet, most financial institutions charge a partial deregistration fee of $25 + HST (Questrade charges $50) per withdrawal.
Wealthsimple does not charge that fee, nor does it charge any trading commissions for buying or selling stocks and ETFs.
If you’re making regular monthly withdrawals from your RRSP, moving to Wealthsimple could save you up to $600 per year in fees.
It can’t hurt to check them out and see for yourself – open a Wealthsimple account here.
Weekend Reading:
With markets rebounding to new highs again, Ben Carlson answers the age-old question about investing at all time highs.
Dan Hallett looks at whether covered call strategies shine in “flat markets”.
If you lose money in the stock market, do you double down? Preet Banerjee says that’s called a martingale strategy, and it’s dangerous.
Anita Bruinsma says that despite tariffs, taxes and global turmoil, you shouldn’t stop investing in the U.S. I agree.
David Chilton and Adam Bornn discuss retirement planning for Canadians on the latest The Wealthy Barber podcast:
Speaking of retirement, here’s another advice-only planner Jason Heath explaining what you need to know about CPP, OAS and tax planning if you want to work past 65.
Just because you can DIY your finances doesn’t always mean you should. Here’s how to know when you need help.
For homeowners, borrowing money is easy. But how do renters borrow money?
Finally, should clients add kids to their home title? Misconceptions abound.
Have a great weekend, everyone!
In all fairness to the bearish perspective, none of the mentioned ETF’s have been around long enough to see how they perform through a bear market like 2008. Time frames are essential for each investor.
Hi Jay,
Justin Bender has done the good work of backtesting all of these ETFs as if they DID exist back then (they are just funds of funds, after all): https://canadianportfoliomanagerblog.com/wp-content/uploads/2024/01/BBB_PWL_Vanguard_AA_ETFs_2023-12-31.pdf
VEQT would have been down 42% peak to trough from June 2007 to March 2009.
The question comes down to how you would have performed if you did something different versus just staying the course.
Hey Rob – we’ve got both Wealthsimple and Questrade accounts and making regular RRSP withdrawals now for cashflow. There is an easy way to get around the $50 deregistration fees at Questrade – one just needs to open an RRIF account and then move assets/cash to it from an RRSP account. This can be done once per year or as needed through the year, they don’t seem to place any restrictions on this.
I’m happy with Wealthsimple overall, but Questrade still has some features that Wealthsimple doesn’t have – like journaling shares for Norbert’s gambit…
Hi Peta, thanks for sharing. Questrade and other platforms definitely have an advantage over WS when it comes to holding USD and performing currency conversions.
Now recently, what I wanted to do was open three additional Self Directed WS TFSAs and then transfer funds from three TFSAs I have with my current fund company. But I was told that due to regulations I could only have one Self Directed TFSA.
I’m still somewhat incredulous.
This is what I was told on May 29.
“The current restriction on multiple self-directed accounts is based on regulatory requirements imposed by financial authorities that we are obligated to comply with. While I understand this may present an inconvenience to your investment strategy, adherence to these regulations is essential to our operations.
I am pleased to inform you that our development team is actively working on implementing a solution that would allow clients to maintain multiple self-directed accounts within our platform. However, at this time, I cannot provide a specific timeline for when this enhancement will be available.’
Hi Tom, what kind of investment strategy calls for having three separate TFSA accounts in one platform?
I have a different strategy and asset mix for each of my kids in their RESP. Instead of having two RESPs to manage, I just hold different funds for them in the same account so I can more easily keep track of their share. My oldest child has VEQT/VSB and my youngest has XEQT/XSB.
Is that something you can try, or are you trying to accomplish something else entirely?
I have shared this with you before, in an email maybe.
The three designated TFSAs in question are simply my way of saving up a little nest egg for my grandkids without them or their parents even knowing about it. They are in my name and at an appropriate time-Graduation, Wedding, down payment or some other special occasion—my wife and I will gift it to them.
Or not. For it’s not that
For we well know that things can go south at anytime.
So, I thought I could simply set up separate Self Directed TFSAs more appropriate for their ages and timelines.
So your suggestion then might well work for me.
Hi Tom, I understand. Here’s a link to the Canadian Portfolio Manager blog where he outlines how to think about managing an RESP for multiple children: https://canadianportfoliomanagerblog.com/how-to-invest-your-resp/
You could certainly apply the same ideas to what you’re trying to accomplish in your TFSA.
That clearly doesn’t pass the smell test. If it were an externally imposed regulatory requirement that they have to adhere to, how would their development team be “actively working” on a solution that clearly breaks that “requirement”?
From the article:
“Moreover, our clients are loving the Wealthsimple platform as well. Whether it was an enticing transfer bonus, or they were just tired of getting nickel-and-dimed by the big bank platforms.”
For me it was both. Thanks to this website for getting me to switch, and also for the huge monetary bonus that I had received from Wealthsimple for doing it !
Next step is to move my grandaughters’ RESP’s, and down the road, my TFSA’s.
Fantastic, James – nice work!
Well, well, well. Seems somebody doesn’t let the facts get in the way of a good storyline. Had you bothered to read what the “bearish investor” actually wrote you wouldn’t be gloating.
Refer back through my posts and you’ll see I wrote on April 6 that I was “short term bullish and medium-/long-term bearish”. Moreover, I added, “We may see a rally soon, and possibly a new ATH, but those will be profit-taking opportunities.” Considering I nailed the bottom (went all in the following day), and have been bullish all the way up to my prediction of a new ATH, perhaps you might want to issue a clarification to your newsletter. (I invite readers to read the thread between Robb and I in its entirety and decide for themselves.)
True to my word, I started trimming profits and adjusting stops last week as we head into a seasonally bearish Q3 in an overbought condition. I think we may eke out a few more weeks of gains, but the risk-reward is quite poor heading into September/October — historically the worst two months of the year. Nevertheless, I may go long again this fall if we get a decent pullback. Why? Because, as I noted previously, Trump and his ilk are going to sugar-rush markets while they continue damaging global trade and creating a debt crisis. I expect we will see a blow-off top for the ages that will certainly end badly. That’s why I specifically suggested we “bookmark [our April 6] exchange and see how it ages over the next 18 to 24 months”, which will put us somewhere between Q3 2026 and Q2 2027, which is still quite a ways off.
You can take your victory lap then if I’m wrong. In the meantime, I maintain it is naive not to manage risk and protect capital when markets enter bubble territory.
Congratulations on perfectly timing the market. With that level of foresight I could have reached my net worth goal long ago.
Of course, jumping in and out of the market for the next 30-40 years of my life sounds incredibly difficult and tedious compared to staying invested in a risk appropriate portfolio and accepting market returns.
I’ll revisit this quarterly to see how your forecast holds up. Until then, I’ll leave you with some words of wisdom from much smarter investors than me:
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”
— Peter Lynch
“The market is a device for transferring money from the impatient to the patient.”
— Warren Buffett
“Trying to time the market is like trying to turn a battleship with a canoe paddle.”
— Howard Marks
“The investor’s chief problem – and even his worst enemy – is likely to be himself.”
— Benjamin Graham
“Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.”
— Bernard Baruch
“The only value of stock forecasters is to make fortune tellers look good.”
— Warren Buffett
“Your success in investing will depend in part on your character and guts, and in part on your ability to ignore the worries of the world long enough to allow your investments to succeed.”
— Peter Lynch
Robb, you knowingly misrepresented the facts of our April 6 exchange in today’s newsletter, describing me as “bearish” when the record clearly shows I was “bullish” and expected an imminent rally with the possibility of reaching new all-time highs. Instead of acknowledging this, and walking back your erroneous statements, you double-down with a characteristically patronizing reply.
I’ll certainly make mistakes in my trading/investing journey, but at least I’ll have the humility to admit when I’m wrong. You should try it some time.
Garth, do you honestly think anyone who read that exchange would come away thinking you’re anything but bearish?
On April 6th you gloated that “at time of writing, futures markets are down another – 6%.”
The confidence (hubris) you display in predicting future events is laughable when one tweet, one scientific breakthrough, one natural disaster, one political assassination, one jobs report, one rate cut can send markets in another direction.
You may think up-and-to-the-right is blind optimism on my part, but it’s a belief in the equity risk premium – that we accept short-term uncertainty and the risk of losing money in exchange for strong returns over time.
The probability that anyone can successfully time the market in-between to juice returns or avoid bad outcomes is vanishingly small, yet you rattle off predictions like you’ve got Biff’s Sports Almanac from Back to the Future.
Will you admit when you’re wrong? My turn to make a prediction. I foresee a lot of goalpost moving in your future.
LMAO, Robb. Your beloved VEQT is up 1.18% from its January high. Good for you! That’s one helluva 6-month return. Had you trimmed just a small portion near the high, and reinvested it near the April low you would have enjoyed a 3-month gain of +20% on that. It’s not rocket science to buy risk assets during periods of “extreme fear”, and trim profits during “extreme greed”.
As to what the future holds, it goes without saying no one knows for sure. What I do know is market concentration and valuations are now at levels not seen since 1999 and 2007. Indeed, the Buffett Indicator just hit 205% — the highest on record, signalling extreme overvaluation. At the same time, a debt crisis is looming while a lunatic imposes tariffs reminiscent of the Smoot Hawley Act of 1930. Can the bubble rise higher? Sure. That’s why I’m still 80% invested, but this is a time to be cautious and anyone who thinks “up-and-to-the-right” continues indefinitely under these conditions is locked in a dangerous belief system. As a reminder, it took almost seven years for the stock market to recover from the dotcom crash. How many investors who lived through that wish they’d taken just a bit of profit during the euphoria and re-invested it a year later?
As for moving goalposts, I do it all the time in trading. That’s because I follow price action and don’t get trapped into rigid opinions, like some people. As Stanley Druckenmiller says, “one of my greatest assets… is that I’m open-minded and I can change my mind very quickly.”
On that note, I’ll sign off on this thread with one last prediction: you will reply with yet another self-satisfied swipe because you insist on being right right, and always having the final word.
Garth, don’t leave. Please, I’m begging you, come back and post your trades throughout the year so we can see your investing mind at work.
It’s not fair that you have perfect insight into my portfolio, but we can only trust your word that you perfectly timed the market (with what, your entire portfolio? 10% of it? What were the stakes?).
Place your trades and come back and post them here (same day). Then we can see if your hours of research and intuition added any value over simply staying in your seat.
If it’s “not rocket science” then back up your claims and tell us what you’re doing (and why, if you’ll be so bold).
Prediction confirmed!
Seeing how you are “begging” me not to leave, and want to know what I’m doing and why, it would be rude not to indulge your request:
Throughout April, I went overweight in three specific sectors — tech/semis, metals and miners, and energy. I also picked up a smattering of various beaten down single stocks in extreme oversells.
My reasoning for targeting Tech/Semis is that these sectors lead most rallies out of corrections and historically provide the greatest gains. I also think the AI bubble has more upside. I’ve now sold most of my tech when it reached my targets and am currently underweight. Hoping to re-enter on a pullback in Q3.
As to metals and miners (palladium, gold, silver, copper, nickel, iron), this is a re-inflation play, tied to currency de-valuation. I’ve been long the materials and mining sector for the past two years, with a heavy focus on precious metals.
I exited my copper miners a bit too soon a couple weeks ago, but am hoping for a pullback in Q3 to re-enter. In recent weeks I’ve continued adding to my precious metals, particularly silver and silver miners, which I expect to now outperform gold.
My third focus is energy, which is also tied to inflation. While the O&G sector is extremely volatile, it can be reliably counted on to enter extreme oversells at least once or twice a year. Canadian companies are also criminally undervalued, with several small- and mid-caps ripe for M&A. Many are awash in free cash flow and pay great dividends in the event I get trapped in a long. I wish I could buy-n-hold these names long-term, but the sector is just better suited to trading. I generally load up any time I see capitulation (often around $67/barrel, or below) and exit when my targets are reached, or during extreme overbought conditions (e.g. Iran crisis.) I’ve rinsed and repeated this strategy six or seven times over the past three years for significant gains each time.
I’ve also had success with uranium miners, too, but kick myself for selling this rally too soon. It’s overbought now, so hoping for a pullback in Q3 to re-enter.
I generally don’t like to short, but did have a go at Tesla a couple times, which was both fun and profitable.
Now that we’re again in overbought territory, I’ve been rotating into defensives — mostly healthcare and staples. Until recently, I was a bond bull, and would normally load up at current prices, but with inflation rearing its ugly head and governments taking on unsustainable debt, I’ve lost confidence in the sector. That said, if the Fed starts panic cutting interest rates and commences QE I will reluctantly pile in.
Let me know if you’d like specific tickers for any of the above with entry points and take-profit targets. In the meantime, keep an eye on PAAS. I started a sizeable position in February 2024 at $16.62, and have been selling highs and buying dips all the way up, including the open this morning. While it’s my highest conviction trade, I intend to start scaling out once it gets above $48.54.
P.S. VEQT formed a bearish engulfing candle today. I wouldn’t do anything on the basis of a single candle, but it might be something to keep an eye on.
For me when my children ask me about motgages and rates, I say what will allow you sleep at night
For me the same process applies to investing as I like to allocate about 5 minutes/month into my portfolio. What allows me to sleep at night.
I remember disagreeing with people on the recent mini crash and stating it was temporary on-line, especially on Blossom. I also put my money where my mouth was and added to some positions almost at their bottoms because I absolutely knew this was a temporary and deliberate pullback. These have resulted in quick 30% gains in like 2 months for some of my ETF choices.
It was so obvious to me, however people were so blinded by their politics and unjust anger they were doing the age old sell low and buy back later high later routines. The opposite of what they should have done. Or dumping US securities and buying other less profitable ones elsewhere, as if that would actually have an impact on anyone except themselves over time. It’s like Freeland’s suggestion to reverse diversify our CPP fund, investing only in Canadian companies. That would be absolute insanity.
Hi Paul, it’s rarely a good idea to let your political beliefs lead your investment decisions. I’ve been seeing this story play out since the GFC and the rise of Zerohedge and YouTube conspiracy theorists. Sad that some people can be brainwashed into believing future predictions and doomsday scenarios.
I don’t have your conviction to back up the truck at seemingly opportune times. I just stay fully invested and accept that I have no control over future outcomes. My faith is in human ingenuity and efficient global markets.
Regarding Wealthsimple, they now allow spousal RRSP accounts but not spousal RRIF accounts. What happens to the investor who turns 71 with a spousal RRSP or one who wants to move some money into a spousal RRIF before 71 to take advantage of the $2000 pension deduction for tax purposes. I wanted to move to WS but not having a spousal RRIF and not being able to do Norbert’s Gambit were 2 reasons for not going there. Maybe if and when they offer another incentive they will have a spousal RRIF account available and I will no longer have USD investments.
Hi Darby, it’s a great point that the WS platform is not perfect for every situation. I assume they’re working on self-directed spousal RRIFs, but if the situation arose where you had a spousal RRSP and must close it and open a spousal RRIF they would just move you to a managed (robo) spousal RRIF, which is supported. Not ideal, but it keeps you at one institution.
And, yes, if you trade in US-listed stocks and ETFs and need to convert currency to rebalance then WS does not support Norbert’s Gambit at this time and wouldn’t be appropriate for that strategy.
The ideal WS client is using Canadian listed ETFs, ideally holding an asset allocation ETF paired with a HISA ETF in retirement. That eliminates any trading fees, no currency conversion fees, and allows you to take advantage of all of the other great features and automations.
Well, I should say *their* ideal client is trading options, buying crypto, and frequently exchanging USD/CAD. If you avoid the things that make WS money then you will likely be better off.