Always a crowd favorite, our “12 Themes,” for the following year, debuted nearly two years ago. As in years past, we thought it would be fun to revisit the predictions and see how they turned out. With the benefit of hindsight, we’ve graded each theme (completely arbitrarily) based on its relevance and accuracy to what actually transpired.
Spoiler alert: we might not have aced it this year but, that’s the beauty of markets—you adjust as new data comes in! Stay tuned for our 2025 themes, coming out soon.
1. Healthcare: Pandemic Hangover Eclipsing, Setting Up for Outperformance vs. the S&P 500
Grade: F
Yikes. A big swing and a miss here. While we thought the sector’s lack of a valuation premium and poor sentiment would set it up for a decent year, healthcare underperformed the S&P 500 by nearly 24% on a price basis.
2. Equal Weight Will Beat Market-Cap-Weighted Equities
Grade: F
Strike two! The dominance of the “Magnificent 7” through the first half of the year left the equal-weighted S&P index trailing its market-cap-weighted counterpart by nearly 11% YTD. Small caps also lagged large caps—double ouch. While we did see a bit of a reprieve in the equal weighted index and small caps in the second half of the year, it was not enough to avoid a failing grade.
3. Shorter-Dated Investment Grade Fixed Income > Longer Duration Fixed Income
Grade: A+
We nailed this one. Shorter-duration investment-grade bonds delivered solid returns, with the Invesco 1-5 Year Laddered Investment Grade Bond ETF (PSB) up 6.95% compared to 5.05% for longer-duration VAB. The further you went out on the yield curve the worse returns you saw as seen with the TLT(20+ year US Government Bonds) seeing a return of -1.23%. Ultra-short strategies, like our Kipling Strategic Income Fund, saw even stronger performance at 12.7% through November.
4. Avoid/Short U.S. Regional Bank Debt
Grade: D
Grading this one was tricky due to a lack of clear benchmarks. After creating a custom index of debt performance for the 10 largest regional banks, we found an average return of 14.52% YTD. While volatile at times, these returns far exceeded what we anticipated.
5. Rate Cuts Are Coming (“Cut! There it is.”)
Grade: C+
We were partially right. The first cut didn’t arrive until September (we predicted March), but we did get three cuts by year-end, with a 71.8% chance of a fourth in December as of this writing. A little aggressive on the timing, but the overall call wasn’t too far off.
6. Oil Continues to Disappoint
Grade: B-
Correct on the “disappoint” call but wrong on the average price. While WTI currently trades at $68.46 (our predicted average), it spent most of the year averaging $75. U.S. production hit 13.5M barrels/day, and OPEC’s production cuts kept the market stable but uninspiring.
7. Slow Growth for Longer
Grade: C
Tough to grade because the prediction itself was a bit unclear. While our Market Cycle Clock remains in the “low growth” zone, defensive strategies (healthcare, consumer staples) underperformed. The title gets partial credit, but “staying defensive” didn’t pay off.
8. Boring but True
Grade: F
LOL. Not boring at all. The S&P 500 is up 29% YTD (vs. a 25-year average return of 6.29%), and even bonds had a strong year, with the Canadian Aggregate Bond Universe up 5% YTD significantly outperforming the last ten year average. So much for boring!
9. Bitcoin’s 2024 Halving Will Drive a Similar Price Path as Before
Grade: A++
Bitcoin hit $100,000 (as of this writing), largely driven by a mix of halving optimism and a wildcard: a second Trump administration, which has been surprisingly “crypto-friendly.” This was easily one of our best calls.
10. Canadian Retirees Rejoice: Dividend Growth Outperforms
Grade: B-
Dividend-focused strategies had a better year, but they didn’t knock it out of the park. For example, XLU (Utilities) is up 30%, slightly ahead of the S&P 500. However, other dividend-focused ETFs, like DVY (iShares Select Dividend ETF), lagged with 22.9%. Our own Kipling Dividend Fund also trailed our Growth Fund by 10% but did still enjoy a very strong year.
11. Election Year Seasonality Plays Out as Expected
Grade: A+
This year followed the classic election-year playbook to perfection: strong start, spring weakness, summer rally, September dip, and a year-end surge. The S&P 500 rose from 4500 to 6000+, almost exactly as expected—just with stronger-than-usual returns.
12. What About That Soft Landing?
Grade: B-
Mixed results here. While old economy sectors like financials (second-best) and industrials (fifth-best) led the way, the Nasdaq still outperformed the S&P and Dow. A soft landing? Sort of. We’d probably more accurately classify it as No-landing.
Overall Grade: B-
Respectable! Despite some bold (and overly optimistic) calls, we had some notable successes, particularly with fixed income and Bitcoin. This year showcased the unpredictability of markets, but that’s also what keeps it fun.
Thank you to all our clients for trusting us with your hard-earned wealth. Keep an eye out for our 12 Themes for 2025, coming in the next few weeks.
All the best.
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