INVESTOR INSIGHTS FOR UNCERTAIN MARKETS: Special Market Dispatch

SPECIAL MARKET DISPATCH, Friday, AUGUST 8, 2025

As I write on Wednesday, August 6, 2025, the U.S. stock market (S&P 500) is hovering near all-time highs, and Canada’s S&P/TSX Composite has officially broken through its own record - buoyed in part by Shopify’s blockbuster earnings this morning.

If you’ve been watching your accounts closely, it might seem like we’ve been on vacation for the past two months. Many of you have sent in new capital, and most of it remains parked in money market instruments, waiting for more attractive opportunities. That’s intentional. Bargains rarely appear when enthusiasm is running high. FOMO - fear of missing out - is not a wealth creation strategy.

So, What’s Holding Us Back?

After decades in this business, we’ve learned that when everyone wants in, it’s often the right time to be cautious. Today, there are plenty of reasons to stay disciplined. Here are our top five:

  1. Global Growth Is Slowing - Tariff uncertainty is weighing on the global economy. We expect job growth to turn negative in the coming months - especially in Canada, where a trade deal remains out of reach.
  2. Cracks in the 'Magnificent Seven' - The most overinvested corner of the market - Apple, Alphabet, Meta, Nvidia, Microsoft, Amazon and Tesla - are still posting strong earnings, but free cash flows are declining. Investors are assuming that massive capital expenditures will yield even greater returns. That’s plausible, but far from guaranteed. It reminds us of the optimism that defined the dot-com era.
  3. Valuations Are Stretched - Many market leaders no longer offer compelling value. Take Microsoft, for example - a company we’ve owned, done well with, and continue to respect. Today, it trades at a free cash flow yield below 2%, while committing over $100 billion to AI and data centre capex in fiscal 2026. That’s the largest investment plan in its history. Will it pay off? Possibly. But the risk-reward profile is far from attractive. Adding to our concern: we’ve received unsolicited calls asking about obscure AI stocks. That’s usually a sign of froth.
  4. Sentiment Is Euphoric - The CNN Fear & Greed Index is back in “Greed” territory after hitting “Extreme Greed” last month. Historically, markets offer better entry points during periods of fear - not exuberance.
  5. Policy Tensions Are Rising - A showdown is brewing between President Trump and Fed Chair Jerome Powell. Trump wants lower rates. Powell must contend with a slowing economy, weakening job growth, and inflation that remains well above the Fed’s 2% target. Historically, the Oval Office tends to win these battles. Markets now expect lower rates and higher inflation - a classic setup for stagflation: sluggish growth, rising unemployment, and climbing prices.

What Comes Next?

This too shall pass. While we can’t predict the timing or magnitude of the next market correction, we view it as an inevitable - and healthy - part of the investment cycle. When it happens, we’ll be ready with cash to deploy, investing right alongside you.

Please do reach out if you’d like to unpack any of this further.

Also, if you missed our latest podcast, Episode #9: Don’t Leave a Mess – How to Disaster-Proof Your Family Legacy - with Sandy Pollack, check it out. The feedback has been fantastic

Written by: Chris Raper, CIM, CFP®

Co-Founder | Wealth Advisor | Cross Border Specialist

Aspira Wealth of Raymond James Ltd.

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