Wealthsimple is one of Canada’s fastest growing and most trusted money management platforms. The company offers a full suite of simple, sophisticated financial products across managed investing, do-it-yourself trading, cryptocurrency, tax filing, spending and saving. Wealthsimple currently serves 3 million Canadians and holds over $30-billion assets. The company was founded in 2014 by a team of financial experts and technology entrepreneurs, and is headquartered in Toronto, Canada. To learn more, visit www.wealthsimple.com.

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This year was great for the stock market, as continued increases in valuations, combined with solid corporate performance, led to extremely high returns.

3 big investment lessons from 2024 | December 2024 | Letter from Ben

A look back that’ll also help you look forward, and what people expect from stocks

From our CIO: Three big investment lessons from 2024

This year was great for the stock market, as continued increases in valuations, combined with solid corporate performance, led to extremely high returns. World central banks switched their focus from fighting inflation and keeping short-term interest rates high, to supporting economic growth and cutting them. Gold came out on top, up 40%. U.S. equities were close behind at 38%, but almost all equity markets, including the TSX (up 25%), experienced above-average performance. The current feeling in markets reflects last year’s nearly uninterrupted rise: individual investors’ holdings of stocks are at all-time highs.

Deep dive into bonds - the different types and how they work - and what the biggest winners, losers, and draws were in November.

How bonds work | November 2024 | Letter from Ben

A primer on bonds, the Trump effect, and what it may take to keep the U.S. market booming

From our CIO: How do bonds work?

All of our portfolios grew significantly in the third quarter thanks to strong asset-market returns. These high returns are normal, but are at the top end of what investors can expect in a quarter.

Q3 managed portfolio performance | October 2024 | Letter from Ben

From our CIO: A look at Q3 performance of our managed portfolios

A look back at Q3, and what’s ahead

I want to focus on this month is risk and how to reduce it efficiently — which is to say, without lowering your potential returns right along with it.

How to be smart about long-term risk | September 2024 | Letter from Ben

Investment risk, a rise in gold, and the future of China

From our CIO: How to be smart about long-term risk

The big news this month was about the U.S. central bank cutting interest rates after having kept them above 5% since May of 2023. Stocks rallied on the move, particularly the companies that are more indebted and exposed to interest costs. Looking at history, the fact that there have been cuts doesn’t predict much about future returns. That’s up to the economy and how it performs.

It’s been a volatile quarter for markets so far, marked most memorably by those couple of scary days earlier this month, where we experienced sharp declines followed by equally strong recovery.

Has your portfolio gotten too concentrated | August 2024 | Letter from Ben

Portfolio concentration, utilities, and where we might be in the market cycle

From our CIO: Has your portfolio gotten too concentrated?

It’s been a volatile quarter for markets so far, marked most memorably by those couple of scary days earlier this month, where we experienced sharp declines followed by equally strong recovery. But for now the quarter has produced solid gains for most major stock and bond indices — and, as a consequence, most investors’ portfolios. It’s also been interesting to see how, after several years of tech-stock domination, long-term treasury bonds, gold, and Canadian stocks took over as the strongest performers. (I’ll get into how that shift might affect the way you think about your portfolio balance a little later on.)

Most portfolios offered in Wealthsimple’s managed accounts continued to grow in the second quarter as optimism around artificial intelligence pushed global stocks up (again).

Q2 managed portfolio performance | July 2024 | Letter from Ben

From our CIO: Q2 managed portfolio performance

A look back at Q2, and what’s ahead

Most portfolios offered in Wealthsimple’s managed accounts continued to grow in the second quarter as optimism around artificial intelligence pushed global stocks up (again). All of the money being poured into AI, along with the belief that users will pay for AI upgrades, had companies including Nvidia and Apple posting extremely strong returns. Because Big Tech makes up such a large portion of the world’s equity markets, this caused equities overall to increase — even though the markets for most developed countries outside the U.S. saw only modest gains (or in the case of the TSX, declined).

CPP manage assets actively, and use leverage to add additional diversification. The result is a portfolio that may not hit the same highs when the equity market booms, but also won’t hit the same lows when it doesn’t.

Lessons from CPP | June 2024 | Letter from Ben

How to decrease risk without decreasing expected returns

From our CIO: What investors can learn from CPP

The group that controls the Canadian Pension Plan's $630+ billion took some heat last month after sharing its latest annual report. In the 18 years since switching to active management, the CPP has underperformed its own much simpler reference portfolio (which it uses as a benchmark for acceptable risk) by an average of 0.1% each year.

A market cycle is the time it takes to move from a market low to a peak and back again. Understanding what drives one can make it easier to stick to your investment plan when things seem bleak, and temper expectations when things are booming.

What is a stock market cycle | May 2024 
| Letter from Ben

From our CIO: What is a stock market cycle?

How the Stock Market Cycle Works

Back in February, I talked about how individual stock markets can have periods of 10 or more years during which results are primarily driven by large-scale structural changes — like the negative returns brought about by inflation in the 1970s, or the two decades of high returns following the post-World-War-II investment boom. But most market movement is driven by simpler things and comes in much shorter cycles.

Q1 2024 was a strong first quarter. Global equity markets continued their bull run, primarily due to two factors - we get into them.

Q1 portfolio performance | April 2024 | Letter from Ben

From our CIO: Q1 portfolio performance

Here’s what happened in Q1

That was a strong first quarter. Global equity markets continued their bull run, primarily due to two factors:

I go through a few ideas to help you get started with diversification.

How do you actually diversify | March 2024 | Letter from Ben

What we mean when we talk about diversification

From our CIO: How do you actually diversify?

In my last letter, I talked about how investors can diversify their holdings to avoid over-relying on the U.S. stock market, since it too can go through periods of extremely low returns. Many of you followed up to ask for more specifics. Here are a few ideas to get you started.

In light of 2022’s market nosedive, why risk investing in equities when interest rates were so high (and guaranteed)?

How to use booms to prepare for busts | February 2024 | Letter from Ben

You can’t know when markets will drop. But you can be ready.

From our CIO: How to use booms to prepare for busts

Over the past couple of years, I often found myself playing the role of stock market cheerleader. Wherever I went, everyone seemed to ask the same question: in light of 2022’s market nosedive, why risk investing in equities when interest rates were so high (and guaranteed)? The mood these last few months is entirely different. As U.S. stocks hit all-time highs, fear has been replaced by euphoria. And I’ve started getting a new question: why not invest everything in U.S. stocks? It’s not an unreasonable inclination, considering the U.S. market has outperformed most major markets over the last 15 years and remains one of the highest-returning indices in history. For anyone who asks me that question, I always suggest that they consider the possible outcomes before making their decision.

As we finish off the first month of 2024, I’d like to talk about the end of 2023 and how it affected Wealthsimple’s various portfolios and assets.

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