Though North American stock indexes have risen to new heights in recent months, anyone who regularly checks financial news these days is unlikely to encounter the words “calm” and “steady” in descriptions of present-day markets. Rather, financial media are inclined to employ adjectives such as “turbulent” and “rocky.” Some headlines are saying the market (or sectors within it) is in bubble territory. Meanwhile, gold, often a refuge for those looking for stability, has also climbed to all-time highs.
David Heyman, a financial adviser for Edward Jones in Victoria, said it’s hard to decide whether we are in a bubble or not. COVID, he argues, exposed the vulnerabilities of the world’s supply chains, and many governments, especially in the United States, focused on domestic industries as a means not to be dependent on suppliers in other parts of the world.
“This is inflationary and costly, but it partly explains the strength in stock markets. Trump, in particular, is determined to bring industrial production back to the US. This trend is expected to continue for many years,” Heyman said.
To avoid risk in the event of a precipitous market decline, Heyman advises those close to retirement to have portfolios heavier in bonds and GICs (guaranteed investment certificates). For those in the earlier stages of their careers, he thinks equities, in the long run, are the way to go.
“History shows you can make a lot more in the stock market than you can in the bond market, but you’ll have to be able to withstand the volatility and endure the next recession, which will come one day,” he said.
In Canada, Heyman said, high prices in the housing market and the fact that interest rates may not fall as low as hoped have put the domestic housing market under pressure. Further, unemployment in Canada is heading upwards, while tariffs are in place and a trade deal remains elusive. There is a similar situation in the United States, he added, with inflation expected to remain high.
“The impact of tariffs in Canada has not been fully felt, as the Canadian dollar has declined to compensate, but Canada is more exposed to US tariffs than most countries. Sharply lower immigration in Canada will also have a dampening effect on the economy,” Heyman said.
Shay (Shy) Keil, senior wealth advisor at ScotiaMcLeod, said many people are worried that a market correction is imminent but that each investor would be impacted differently.
“Be mindful of what you own and make sure you are not overly concentrated in any one area,” Keil said. “When you are young, you have the time to weather 10-15% declines in the stock market. When you are retired or nearing retirement, your ability to withstand a market decline is absolutely a function of how you are invested, and the reality is that many people do not know what risks are in their portfolios.
“The challenge is that, when markets are volatile, investors often shift to much lower rate GICs/bonds without considering the significant impact it will have on their monthly income,” said Keil. “We would recommend to consider investing more into blue chip investments that will potentially maintain strong income and historically may not be as impacted by market volatility.”
Keil specializes in guiding clients with tax-smart strategies and cash flow solutions. “Earning predictable and consistent income is valuable in all market and economic cycles,” he said. “Our clients sleep better knowing they can draw from this income without touching their original capital, even when markets are volatile.”
This year has been a stellar one for technology stocks. As of Oct. 16, the sector on the S&P 500 index, where many mutual funds are invested, has risen more than 19%, with some companies climbing nearly 35% year-to-date. Consumer and energy stocks have shown much more modest increases and have declined in some cases.
On the Toronto Stock Exchange, most sectors have done well in 2025, with IT and materials leading the way during the current bull market. Consumer staples, utilities and health care are often considered stocks that perform well in bear markets.
In general, bonds, while offering a lower return, tend to be more stable than stocks. GICs are investments with set rates of return that are guaranteed up to $100,000 by the Canada Deposit Insurance Corporation (CDIC).
When investing, one should understand that there is a risk of losing money. While financial institutions may present packages that draw attention to positive returns over the course of several years, they will also include words to the effect that funds are not guaranteed to go up, values fluctuate and future results may not mirror past performance.
Sam Margolis has written for the Globe and Mail, the National Post, UPI and MSNBC. This article is for general informational purposes only and does not constitute financial, investment or other advice.