# 2025 Was Nut(s): A Canadian CIO's Review Source: https://www.youtube.com/watch?v=1sV_3OvQyFI Recap page: https://rapidrecap.app/video/1sV_3OvQyFI Generated: 2025-12-28T11:38:51.405+00:00 --- ## Quick Overview The year 2025 was turbulent for Canadian investors, marked by significant stock market volatility, the Canadian stock market underperforming the US market by nearly 5 percentage points annualized over five years, and a narrowing but still present wealth gap favoring homeowners over renters in major Canadian cities, while gold delivered strong returns that proved historical low expected returns wrong. **Key Points:** - The speaker, Ben Felix, reviewed the market events of 2025, noting that 2024's unexpected returns for stocks, gold, Bitcoin, and real estate were not what anyone predicted (0:37). - The Canadian stock market (XIC:TO) underperformed the US market (XUU:TO) by 5 percentage points annualized over the five years ending December 31, 2024 (1:46). - Despite recent declines, the 10-year average return for Canadian value and small-cap stocks (47.74% and 33.62% respectively as of Dec 17, 2025) still trailed the Canadian market index (39.46%) (5:40). - The Canadian allocation in Dimensional funds was recently reduced to 27.5% (down from 32%) in anticipation of lower expected future returns, reflecting a more conservative stance (8:58). - Gold had an incredible year, returning 57.53% in Canadian dollar terms through December 17, 2025, which contradicted historical data suggesting low expected returns for gold at current high valuations (9:36). - The wealth gap between renters and owners in Canada remained favorable to owners, with the average Renter/Owner Net Worth Ratio across 12 cities at 0.99 (meaning owners were slightly better off) as of November 2025 (14:38). - The video highlights that market concentration in the US (Top 7 stocks weighting) is at its highest level since 1927, though this high concentration has not historically predicted poor subsequent 10-year returns (16:09). ![Screenshot at 0:09: The speaker introduces the context by mentioning his personal experience of having testicular cancer surgery the same day PWL Capital was acquired by OneDigital, setting a tone of personal relevance to market events.](https://ss.rapidrecap.app/screens/1sV_3OvQyFI/00-00-09.jpg) **Context:** The video serves as an annual review by Ben Felix, CIO and Portfolio Manager at PWL Capital, summarizing key financial and economic developments encountered in 2025, particularly focusing on Canadian market performance, the role of gold as a hedge, and the ongoing debate between renting and owning property in Canada. Felix uses recent data and academic research to challenge prevailing narratives about market concentration and asset class performance. ## Detailed Analysis Ben Felix reviews the surprising market movements of 2025, emphasizing that investors should learn from the volatility and avoid reacting emotionally to news headlines, which often drive short-term market moves that are hard to predict. He highlights that the US stock market significantly outperformed the Canadian market, with the US index returning 109.6% (in CAD terms) versus the Canadian index's 56.81% over five years ending December 2024. This trend of US outperformance continued in 2025, with the US market down only 16.27% year-to-date (as of April 2025) compared to the Canadian market's 29.46% return. Felix stresses the importance of sticking to a long-term investment plan rather than market timing, referencing historical data showing that intra-year declines do not necessarily predict negative calendar-year returns. He then discusses international diversification, noting that despite US outperformance, research supports its continued importance, even though Dimensional funds have recently tilted their Canadian exposure down to 27.5% in anticipation of lower future returns. Regarding gold, its strong 57.53% return in 2025 defied historical evidence suggesting low expected returns at current high valuations, proving that gold can still act as a hedge against macroeconomic declines. Finally, he revisits his 2005-2024 analysis on renting versus owning in Canada, concluding that while owning still resulted in a slightly better net worth ratio (0.99 average), the gap has narrowed significantly, especially in markets like Toronto where renters outperformed owners by 1.05 to 1.00 in net worth ratio. He also notes the recent launch of complex, leveraged ETFs and an overall trend of increasing US market concentration (Top 7 stocks holding over 32% of total market cap as of late 2025). ### 2025 Market Review - 2025 was a wild ride in markets, with US stocks significantly outperforming Canadian stocks, leading to a 5 percentage point annualized difference over five years (0:37 - 1:46). ### Canadian Real Estate Trends - Real estate prices are dropping nationally, with Toronto's peak composite price drop being 26% through November 2025, although other cities were more resilient (12:35). ### Renting vs. Owning in Canada - The average Renter/Owner Net Worth Ratio across 12 cities was 0.99 for the 2005-2024 period, meaning renters were only slightly worse off than owners on average (13:51). ### Gold Performance - Gold returned 57.53% in CAD terms in 2025, contradicting historical data that predicted low returns at high valuations (9:36). ### Market Concentration - US stock market concentration in the Top 7 stocks reached its highest level since 1927 (over 32% weight), but historical data shows this is not a reliable predictor of poor subsequent 10-year returns (16:09). ### ETF Industry Trends - The largest group of new products in 2025 involved complex, leveraged, and covered-call ETFs, which the speaker suggests are designed to exploit investor biases (17:40). ![Screenshot at 0:09: The speaker introduces the context by mentioning his personal experience of having testicular cancer surgery the same day PWL Capital was acquired by OneDigital, setting a tone of personal relevance to market events.](https://ss.rapidrecap.app/screens/1sV_3OvQyFI/00-00-09.jpg) ![Screenshot at 0:50: Title card appears: "WHAT WE CAN LEARN FROM 2025", framing the video as a retrospective analysis of the year's market behavior.](https://ss.rapidrecap.app/screens/1sV_3OvQyFI/00-00-50.jpg) ![Screenshot at 1:40: A chart displays the five-year annualized returns \(2019-2024\) for Canadian, US, International Developed, and Emerging Markets stocks, clearly showing US outperformance.](https://ss.rapidrecap.app/screens/1sV_3OvQyFI/00-01-40.jpg) ![Screenshot at 2:07: A graphic displays headlines referencing "The productivity problem" from the Bank of Canada and concerns over capital gains rules and foreign investment loss, illustrating negative Canadian economic sentiment.](https://ss.rapidrecap.app/screens/1sV_3OvQyFI/00-02-07.jpg) ![Screenshot at 10:38: A blackboard graphic illustrates Bayesian updating using the formula P\(A\|B\) = \[P\(B\|A\) \* P\(A\)\] / P\(B\), demonstrating how new evidence updates prior beliefs.](https://ss.rapidrecap.app/screens/1sV_3OvQyFI/00-10-38.jpg)