Annual Portfolio Review – 2025

In this edition, I’ll walk through how the portfolio performed in 2025, what worked (and what didn’t), and how I’m thinking about positioning the portfolio going forward.

How Did the Portfolio Do?

In real Canadian dollars, the portfolio gained 23.1%, which is a very strong result—especially since this figure includes currency losses.

For investment measurement, I typically add back currency effects to isolate true investment performance. After adjusting for currency, the portfolio returned 26.2%. The goal here is to measure stock performance, not currency speculation.

For comparison:

• S&P 500: 16.39%
• RSP (Equal-Weight S&P 500): 11.2%
• TSX: 28.25%

More importantly, the average small investor likely earned only mid-single-digit returns. If you’ve done better than that, you’re already ahead of the pack.  If you only had Market Index ETFs, then you also did really well again this year.

Overall, I’m very happy with this year’s results. Beating the S&P 500—my primary benchmark by almost 10 points —is a really big win. Only the quirky TSX managed to do better, and that index remains heavily driven by gold and resource stocks, which brings higher risks.

How Did I Do It?

As many of you know, I deliberately reduced exposure to the most expensive and risky areas of the market starting last year. That decision led to some underperformance in 2024 – exactly as expected.

Going into 2025, I assumed similar results, since the strategy didn’t change much. Hoping for a sector rotation away from the perennial winners.

The core approach:

• Avoid over-valued technology stocks
• Overweight energy, healthcare, utilities, and consumer staples
• Increase international and Canadian exposure
• Reduce U.S. exposure

This was one of the largest deviations from the S&P 500 I’ve ever made.

So… Did the Strategy Work?

Yes and no.

Once again, communication services and information technology were the biggest winners in 2025 – something I did not expect, especially after 2024.

That said, the market had much more breadth this year. More sectors participated, and international stocks significantly outperformed. Even though I got a few macro calls wrong, a lot of individual stock picks went very right, some related to the AI theme, some not.

Some highlights:

• Cameco: +81% YTD
• Google: +65%
• Alibaba: +74%
• Shopify: +50%
• ASML: +54%
• BNPQY: +54%
• GE Vernova: +101%
• TSM: +52%
• Barclays: +92%
• GE: +87%
• CVS: +77%

Ironically, a portfolio with only half the technology exposure of the market ended up hugely outperforming—in my opinion, largely due to luck.

Yes, moving into grocery stores, unloved healthcare, and utilities helped reduce risk. But that’s not where my gains came from. The biggest winners were the ones no one expected.

These less obvious ones include: Cameco (Energy) miner of Uranium, BNPQY (Financials) a European bank and CVS (health) a boring pharmacy all big winners. I certainly didn’t predict those.

You Make Your Own Luck (At Least Partly)

Many of these big winners were purchased years ago, often when they were deeply out of favour. Their true returns are in some cases actually multiples of what you see up above for this year.

This reflects one of my consistent themes:
Buy what’s out of favour.

• China was “uninvestable” → I bought Alibaba
• Google was “dead because of AI” → I bought Google
• European banks were “dead money” → I bought BNPQY

Not every market narrative is wrong—but many are. And when the market convinces itself it knows the future with certainty, opportunity usually appears.

Recently, I’ve sold large portions of several big winners and reinvested back into more under-appreciated names. While many investors like to “let winners run,” I often prefer to harvest those gains to reduce risk.

What goes up can come down just as fast.

The Two Kinds of Luck

Not everything worked.

• NVO: –40%
• CSU: –25%
• LMN.V: –33%

Every portfolio has losers. In fact, it’s normal to have more losing positions than winning ones.  

The difference?

• Winners can grow infinitely
• Losers can only go to zero
• Losers are not necessarily bad choices, the market for whatever reason simply did not agree with you and next, year things could reverse.

Bad luck happens every year. In 2025, good luck simply outweighed the bad.

As I’ve said before, investing involves far more randomness than most people care to admit. Sometimes it’s better to be lucky than smart.

This year, I was very lucky.

Looking Ahead: What About Next Year?

My expectation:

• More volatility in 2026
• Possibly a moderately lower return year after three strong ones.  But we should remember that the market goes up far more often than down.

Market risk will remain elevated due to expensive indexes. At the same time, rising government spending—especially in the U.S.—makes a deep recession less likely.

So that’s just a guess—and not worth much—but it’s a probabilistic risk worth acknowledging.

2026 Strategy: Same as It Ever Was

No major changes planned.

• Minimal trading
• Opportunistic stock selection
• Continued focus on risk reduction

I dislike frequent changes. Investing should be boring.

I only make major moves when the market is doing something truly stupid. As prices rise quickly, so does risk—even when things feel great.

The goal isn’t to make money quickly. It’s to keep compounding year after year.

When the next drawdown comes—and it will—I want to avoid chasing the same crowded, expensive trades over the cliff. Almost all stocks are correlated in a downturn and although it feels bad, there is nothing worse than permanently destroying your capital with speculative or expensive positions – this is the true danger. Avoiding big mistakes matters more than chasing big gains.

Marc’s Monthly Moves

Sold

• ADM (tax-loss harvesting)

Bought

• NOMAD – European food company
• FISV – Added to existing position

2025 Performance Summary

• Portfolio Return: +23.1% (including currency impact)
• Portfolio Return: +26.2% (excluding currency impact)
• S&P 500: +16.39%
• RSP Equal-Weight S&P 500: +11.2%
• TSX: +28.25%

The portfolio outperformed the S&P 500 by 9.81 percentage points.

How did you do? If you got this far, feel free to post your returns by leaving a comment. I know at least one person who beat me this year.