The floor of the New York Stock Exchange. Our experts said although the valuation spread between the U.S. and international markets isn’t as wide as last year, a diversified approach is still appropriate.Richard Drew/The Associated Press
On Jan. 22, investment editor Darcy Keith, investment columnist Tim Shufelt, investment reporter David Berman and market strategist Scott Barlow answered your questions on how to weather the markets this year. Readers asked about retirement strategies, value investing, commodities and more. Here are some highlights from the Q&A.
Smart investments in 2026
Last year, international markets outperformed the U.S. market. Do you think this will continue in 2026?
Shufelt: The setup that led to such great performance in non-U.S. stocks last year is still in place – attractive valuations, a catch-up in growth and a weak U.S. dollar. In Europe, defence spending is picking up and there should be more fiscal support for the economy, which could provide a boost to European stocks as well. But a lot of it will come down to artificial intelligence. One big reason U.S. stocks lagged last year was because the AI trade hit a bit of a rut. Meta is still about 20 per cent off its peak. Amazon was flat on the year. Microsoft shares have been declining since July. And Oracle has been smoked, on the order of 40 per cent. These names have such big weights in the S&P 500 that their performance will say a lot about how the U.S. stock market unfolds this year.
Keith: It’s always dangerous to assume what worked one year will work the next. What we do know is valuations in the U.S. are still running ahead of most international markets. That may be for a good reason, if you believe we’re still in the early innings of the AI revolution, or if the U.S. economy is going to be much stronger than most other economies. The valuation spread between the U.S. and many international markets isn’t as wide as it was a year ago, but it still suggests a diversified approach would be an appropriate course of action.
Many analysts think the gold rally will continue, though not a repeat of last year's performance.Mike Groll/The Canadian Press
It appears that the dominant opportunities in Canadian investments this year will continue to be in natural resources, such as gold and oil, as well as the financials. Would you agree?
Keith: Those sectors are certainly a couple heavyweights in the Canadian index. But are they the real opportunities in Canada right now? Gold is going through the roof, as is silver. On the charts, they look overextended, but they could stay on that trajectory for some time. Financials have done very well in the past year, so valuations aren’t as attractive as they have been. Energy is also a heavyweight, and value investors may want to keep an eye on that. Right now, it’s not clear what’s going to get oil prices up though. The Trump administration will do whatever they can to keep the price of oil down ahead of midterm elections, since that filters into cost of living.
The outlook for gas is somewhat more promising. Even some tech plays in Canada have been beaten down and might be worth a look. Constellation and CGI are examples. And check out industrials. Rails are at a pretty attractive entry point, and pay decent dividends, if you believe the economy will stay on track, no pun intended.
Shufelt: While we’re not exactly in a commodity bull market, there does seem to be momentum behind the metals and mining sectors. For gold specifically, there’s little chance of a repeat of last year, but lots of analysts out there think the gold rally has legs. Tariffs, policy uncertainty, demand from central banks – these are all still intact. The price of oil, on the other hand, is close to a five-year low. There’s just too much oil out there right now. We’re going to need to see signs of the global oversupply easing for crude prices to make a big move upward. And then there’s the big banks, which generated a total return of more than 40 per cent last year. Valuations are a bit stretched. And the Canadian economic backdrop may not support a whole lot more upside from these levels.
Barlow: I like the natural resources idea, but I’m more confident in copper and natural gas than oil. I keep waiting for a Trump-caused drop in the U.S. dollar because it will help commodity demand and prices. In general, I think energy is going to be a big deal as data centres come online. Political pressure to keep electricity prices low will lead to a lot of gas demand.
How do I “Trump-proof” my global equities portfolio in 2026?
Berman: It could be old news at this point, but gold has been an ideal foil to Trump policies. How long does the rally go on? The Greenland news this week suggests that gold continues to be an ideal hedge against rising geopolitical risks.
Barlow: Problem that he is, Mr. Trump is sensitive to equity sell-offs so there’s that. I am more concerned with his effects on U.S. bonds yields and the U.S. dollar in case global investors just throw in the towel on U.S. governance. Gold and, to a lesser extent, copper are decent hedges for that and minimizing U.S. dollar assets would also be helpful. Domestic companies with a ton of U.S. exposure, including some banks, may be at risk a bit.
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It seems there is more uncertainty and froth in the markets now than in previous years. Which industries of the Canadian economy are the least exposed to global market volatility?
Berman: I think you would have to consider sectors that are mostly domestic. That would include telecoms and grocers and, to some extent, banks. But as we’ve seen in the past, domestic exposure doesn’t provide bullet-proof protection. The banks were hit during the financial crisis in 2008, as contagion spread globally. Telecoms are in a deep funk right now over rising competition and high debt loads. Grocers have done exceptionally well, but the stocks aren’t cheap.
If you're worried about a market crash, make sure you have the right amount of exposure to stocks for your age, circumstances and risk tolerance.Jeenah Moon/Reuters
Planning for the long term
Is the timing correct for there to be a 40-per-cent decline? What should I be investing in and not purchasing now to prepare for this?
Shufelt: The first thing to keep in mind is that 40-per-cent market crashes are fortunately very rare. On average, there’s one every few decades or so. But there seems to be lots of nervousness out there about the potential for a major selloff, especially among retail investors. Some of this is just due to the incredible run stocks have been on lately, with three consecutive 15-per-cent-plus years for the S&P 500 index. Stock valuations are undeniably high. But it’s important to remember that valuations matter for long-term returns, yet tell us almost nothing about how stocks are likely to hold up this year. And this bull market is largely supported by corporate earnings, which wasn’t the case in the dot-com bubble. That goes for both the U.S. and Canadian markets.
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About that market crash. Step one would be to make sure you have the right amount of exposure to the stock market for your age, circumstances and risk tolerance. If you’re too loaded up on stocks – and many people are these days – you’re not going to have a very good time. If a major selloff would be too much to bear, either financially or psychologically, the time to reduce your stock holdings would be now. You do not want to be selling into a market downturn, which effectively turns paper losses into permanent ones. If you’re in a position to keep putting money into the market, that’s all the better. Your portfolio will bounce back quicker, in large part because you’ll be investing in stocks at cheaper and cheaper prices. I recently wrote on the topic here.
My 95-year-old mom, who has most of her wealth in Canadian stocks, requires expensive home care. She‘s done well in the market and is now using this nest egg to pay for her at-home care. How would she best weather this market dip?
Berman: I think you just want to make sure that the cash generating from this portfolio is sufficient to cover the expenses related to home care. If not, a severe downturn could come as a double shock: a depleted nest egg and ongoing withdrawals.
The benefit of Canadian stocks is that you don’t have to worry about currency fluctuations and generally dividends can be quite rich. But if you can’t handle a downturn, then consider diversifying into safer assets, such as GICs or even bonds.
Keith: At that age, I don’t think she should be taking on too much risk. It’s probably time to cash in some of these stocks into safer investments that you can count on, with low volatility. The last thing you want is undue stress. It’s great she has done well with her portfolio. Congrats. Plan a celebration and share the wisdom with others on what smart investing can accomplish.
Our experts say those planning for retirement should invest in safe assets but can still hold stocks with good dividends for the long run.Getty Images
What financial and investing advice do you have for individuals who are preparing to retire in 2026?
Keith: Figure out how much you need to withdraw in the years ahead and set up a cash wedge. If you need to withdraw funds in the next three to five years, have them in safe assets such as GICs and high-interest savings accounts and short-term T-bills. But don’t be scared of keeping a sizeable portion of your assets in stocks for the long run. That’s especially true if you’ll be counting on these investments for many years ahead and you’ll need inflation-beating returns. Consider stocks that are safer and can create good dividend streams in retirement, such as pipelines and utilities. Overall, a great time to meet with an adviser and track a plan.
I’m 79 and sold my house. How should I invest the $600,000 cash I have?
Barlow: Academic finance studies all suggest low-risk investments because of age, and there might not be time to recover from deeper losses. In these cases it is better to invest in boring utilities, staples, bonds and GICs, and budget for the resulting income rather than reach for higher returns, get beat up, then endure permanent loss of capital.
I’m a recent retiree. Can you suggest defensive strategies that still provide growth to cover inflation and provide income?
Berman: If you’re nervous, safe GICs can still provide yields of about 3 per cent. And even money market funds should keep up with inflation and provide a safe level of income. Beyond that, you might want to consider balanced funds, which divide your money between an internationally diversified portfolio of stocks and bonds. There’s no guarantee here, but at least you’ll be exposed to a little bit of everything, limiting the risk of a severe downturn. Also, consider dividend-paying stocks (for funds) of companies with long track records of raising their distributions.