Markets and Math

Happy 2026 Everyone!

I intentionally did not do an end of the year summary as we all know the great success we have had the last few years and the numbers speak for themselves. I find my emails are better received when there are more concerns than high returns... rings nicely, hey?

I have had too many conversations lately about the next "big one" and/or " I hear a crash is coming". Thankfully, that makes me very happy as I still adhere to the Warren Buffet approach of "be fearful when others are greedy and greedy when others are fearful". So, keep the concerns coming and we'll stay long in the markets.

My new favorite slide is below, courtesy of my friends at Mackenzie. Thanks Naureen, your Tuesday emails often have great info I use with my team and clients alike!

Man, those numbers are STAGGERING! Seven red, the remainder green. Steve, this can't be true you say?

Well, there's the math and it doesn't lie! 82.5% of the time the "market" has been positive in 40 years. That can't be correct, right? Well, that smashes that theory that we always have losses and corrections on a regular basis. Right turn, Clyde (if you know, you know).

Compare that to the top hitter in baseball who "only" hit .371. The S&P 500 is hitting .825! I'll take that batter. Every. Single. Time. All-Time MLB Player Hitting Stat Leaders | MLB.com

Coincidentally, Babe Ruth is number 15 on that list. You likely thought he was number one (or near the top, at least). Well folks, don't always think the media gives you the most correct info, but who would've ever thought that, lol?

The 'hot' trade lately has been the things you can touch and feel, as I put it. Gold, Silver, Copper, etc. This is because there has been much uncertainty on geo-politics, debt, war, climate, blah blah.. All the same as always. It never changes. Just the color of the lipstick on the pig. Create fear. It always works on the masses.

Gold and Silver (among other materials) have done very well recently. Congratulations to those that have some. It has FINALLY paid off, sort of (more below)! You only waited a decade, two, or three, sigh.

I have also been very vocal that these are just like stocks (same as crypto) and, like any other stock, I would have sold it all in the last few weeks if I owned it as part of my model. Those of you that asked recently have got that answer and I stick by it.

On Gold: it finally is priced where it should be on keeping up with inflation with a bit of extra appreciation: Gold Return Calculator (Inflation Adjusted)

Cool tool! I put my birthday in and in the last 57 years it has averaged 4.618% a year, inflation adjusted. FAR from stellar. Miles and miles from stellar. More like a rotten investment. Another slide from our friends at Mackenzie:

For some fun, let's do Apple and Nvidia compared to Gold, since each became publicly traded. You might want to take your socks off, as they will be blown off as I compare these two! These calculations are courtesy of ChatGTP:

Apple vs Gold: If you invested $10,000 in 1980, the outcomes would look very different today.

$10,000 invested in Apple at its 1980 IPO would be worth roughly $25–30 million today, thanks to massive long-term growth and stock splits.

By comparison, $10,000 invested in gold in 1980 would be worth around $50,000–$70,000 today, reflecting gold’s role as a store of value rather than a high-growth investment.

In short, Apple dramatically outperformed gold over the same time period.

Nvidia vs Gold: If you invested $10,000 in Nvidia at its IPO in January 1999, that investment would also be worth roughly $25–35 million today, depending on the current share price. This accounts for Nvidia’s IPO price, all subsequent stock splits, and long-term price appreciation.

By comparison, $10,000 invested in gold in 1999 (when gold was near multi-decade lows around $250–$300 per ounce!) it would be worth approximately $150,000–$200,000 today, based on recent gold prices near record highs.

In short, while gold preserved and modestly grew value over the period, Nvidia’s IPO investment outperformed gold by well over 100×!

There's the math for those that think they are great investments. I continue to REFUSE to buy these assets for you or myself. Period. The math is the math. They have no skin in the game, no management teams with stock incentives, no business plans, no use- except to sit in your safe to make you feel you did something to hedge against market risk that has a proven 82% positive performance. I personally, think the $50-60 million in my safe would look much sexier than $270,000 in gold. Just sayin' ....Gold is not a good hedge or safe haven. It's a destroyer of growing wealth for you and your families. Shotguns to protect your gas, food, water, etc. are the real doomsday hedges.

And this just happened Friday: Silver plunges 30% in worst day since 1980, gold tumbles as Warsh pick eases Fed independence fear | CNBC.com ... And yet investors buy this for safety and worry about market crashes? I scratch my head on the dichotomy.

There has been too much buying of these "touchy-feely things" in the last few months. This, in my opinion, has had almost all to do with the US dollar declining to buy those touchy-feely things on the nervousness of where Trump was going with the Fed. I have told anyone that asked that I thought the USD and gold/silver were on inverse paths and this Friday selloff confirmed this to me: Why Trump's new pick for Fed chair hit gold and silver markets - for good reasons | theconversation.com

I would be a seller of materials, and crypto for same reasons, and a buyer of USD and Stocks on this new pick for the Fed.

Back to the markets. The S&P 500 is on track to grow this year. The forecast was around 11-13% growth. We are coming in around 17%, on average. Does that sound like "crash and burn" markets? Not to me.

January was a nice start to the year. From my friends at CBNC:

The S&P 500 is on course to end January by rising more than 1%. Historically, a January gain has preceded a strong annual performance. Data from the Stock Trader’s Almanac shows the S&P 500 averages a 17% advance in years in which the “January Barometer” is positive. The barometer has also correctly predicted an annual advance in 41 of 46 years in which January has ended with a gain.

Who wants to fight that math, too, lol? I am still a buyer of these markets. When I'm talking the markets and politics with many of you I often ask "is a war in Ukraine or unrest in the USA going to slow down iPhone sales?" We must remember what gets affected in the daily news is much different than what is happening for individual companies we own.

This just in, lol: Apple beats Wall Street expectations with top and bottom line beats, record iPhone revenue | Youtube.com. A record quarter! Wow, this world is a mess, Steve. We should sell everything and buy gold, don't you think? Not. Going. To. Happen.

The discussions I have with many of you, especially when we first meet, is that you feel it is almost yearly that you have lost money or had terrible returns. I'm sorry about that, but not now that you are invested with us you are fishing in a better lake now.

You just need to have it explained better and have a different view on time horizon and risk. True risk is not about safety of principal as much is it is about income, growth, and stability. Retirees need steady income. Pre-retirees need sustained growth. A baby doesn't need a balanced fund. They have 17+ years of not touching the money. A retiree does not just die the day they retire. They should hopefully have at least 20 years, or more, of income needs. We educate and invest with these principals, and the math above at the forefront of our modelling.

All said, I think the world moves much quicker with much more to polarize us all. This creates unjust fear. With that in mind I am a buyer of innovation still. We are buyers of AI, quantum (just added a small position), personal air flight in Joby, Stub to take on Ticketmaster. These will be volatile and are very small portions of our diversification but if they can come close to what Apple or Nvidia have done we can wait patiently.

On global unrest: Would a company like Facebook (Meta) not have many more eyes on it daily for all the politics and chaos in media right now? They killed it last quarter. Ad revenue killed it. We own around 4% today.

On the rest of 2026: February and March tend to be volatile. Be prepared. Once earning slow down, markets trade more on news and politics. April brings much higher tax refunds due to last year's BBB: Tax Refunds and the One Big Beautiful Bill Act. This will create a boost to consumer spending, which is good for investors. Then we have a SpaceX IPO this summer which equals some volatility as money will need to come from stocks, bonds, materials, and cash to buy into this. We will wait until it crashes, as all things do (see above on gold and silver). Then we have the US mid-terms in November. Lots of reasons for both good and bad ahead. I like elections, as both parties toss around money more than my stomach tosses a taco around with some bad tequila.

In other words, volatility will always be here. I am monitoring things, and until a systematic problem arises like in 2008, we will remain calm.

I will continue to try to put notes out when we see volatility like Friday. I hope you all appreciate that more than me sending emails out to brag about our great performance and then hide when markets are tough. I would rather the numbers speak for themselves and then reassure you as to why I still am a buyer when we might be getting a little nervous. If you have a different perspective or idea, drop me a line. I would love to hear it.

Gotta go... It's Sunday and I just got a text to get home and put the prime rib in the Big Easy (best cooker ever for this or turkey!). Jackie's got Yorkshire and mashed potatoes on the go, and some other healthy stuff I think 🙂 Fine dining tonight!

Cheers,

Steve

This information has been prepared by Steve Switzer who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates. This content was partially generated by artificial intelligence. The advisor reviewed the critical information independently.