8th Edition of the Steady Gains Newsletter

Tax Season: Final Documents

Our final tax documents for the 2025 tax year are scheduled to be posted by April 16. After that date, you should have everything you need to complete your filing.

If you believe anything is missing, please reach out to our team directly. We are here to help ensure a smooth and timely filing.

 

Falling on an Escalator

The daily news cycle is dominated by acute friction. Shifting tariff regimes, an ongoing conflict in the Middle East, and broad geopolitical instability make it easy to conclude that something is fundamentally wrong.

Yet equity markets have remained notably resilient. This divergence between public sentiment and market performance can be confusing. To understand it, consider the analogy of falling on an escalator.

If you stumble on an upward-moving escalator, the immediate sensation is jarring. Your focus is entirely on the fall. But the underlying mechanism continues to carry you higher. The global economy operates in much the same way.

The Quiet Power of Earnings

Headlines highlight acute, sudden risks. They rarely cover the slow, steady compounding of corporate earnings or the quiet implementation of new efficiencies. Businesses are highly adaptable. When faced with tariffs or supply chain disruptions, corporations adjust capital, find new markets, and optimize operations.

The chart below illustrates this point. It tracks the four-week change in 12-month earnings forecasts for the S&P 500 technology sector. The latest reading is the highest in roughly 30 years. In other words, at the very moment when headlines are at their most negative, analyst expectations for future corporate earnings are surging. This is the upward momentum of the escalator.

Source: LSEG IBES via The Wall Street Journal

This strength extends well beyond technology. S&P 500 companies are expected to report earnings growth of approximately 13% for the first quarter—a sixth consecutive quarter of double-digit gains. Nine of eleven sectors are projected to report growth, led by Information Technology, Materials, and Financials. The escalator is broad.

Diversification at Work

A headwind for one sector is frequently a tailwind for another. The same geopolitical instability that dominates the headlines has put significant upward pressure on global energy markets.

The S&P/TSX Capped Energy Index—Canada’s benchmark for energy producers—has returned over 75% in the past twelve months. Because our portfolios maintain deliberate exposure to Canadian energy equities, the very friction that causes anxiety elsewhere has been a direct contributor to portfolio performance.

Markets Price Reality, Not Emotion

Markets do not ignore risk. They price it in. A known risk—even a significant one like an ongoing conflict—is quickly absorbed into valuations. Markets measure success in terms of cash flows, balance sheet strength, and long-term earnings potential. Not the emotional weight of the evening news.

We do not minimize the real uncertainties in the global economy. Risks require careful management and continuous assessment. But successful investing requires separating our natural emotional reactions to world events from the mechanics of how markets actually function.

The news will likely remain turbulent. The escalator continues to climb.

 

Caldwell Group

Richardson Wealth Limited