Market Volatility and the Stewardship Filter

The market is currently experiencing a healthy dose of volatility, driven not by a systemic failure but by a sudden change in expectation around the U.S. Federal Reserve’s interest rate policy. For you, the key is to remember that these short-term dips are normal, and our focus remains on your long-term plan we built to weather this exact kind of noise. We help you replace the chaos of the news cycle with a clear, enduring plan.

You may be feeling that familiar, low-level anxiety—the fear of "screwing it up" or seeing your hard-earned wealth become a burden, not a blessing. That feeling is 100% normal. But the good news is that we have a plan for this. When the financial headlines feel chaotic, a steward’s job is to shift their gaze from the portfolio to the pathway. Let’s look at what is actually happening in the market and, more importantly, what it means for you.

Why is the Market Volatility Happening Right Now?

The central reason for the recent market pullback is a repricing of risk driven by a fundamental shift in sentiment regarding the U.S. Federal Reserve’s next move.

What was once priced as a near-certainty—a series of interest rate cuts beginning in December 2025—is now in significant doubt. The odds of a December rate cut have plummeted from around 72% to under 50% in a matter of weeks, which is a dramatic collapse in market consensus.

• The Problem: The market had previously assumed the Fed would ease rates soon, which fueled valuations in riskier assets, particularly in the tech and growth sectors.

  
  

• The Pivot: Recent communication from Federal Reserve officials has fractured this consensus, making investors doubt the appropriateness of a near-term cut.

  
  

• The Effect: This uncertainty has forced investors to re-evaluate the price of a potential delay, leading to a broad, measured pullback across global markets, including a modest 1.4% decline in the TSX.

  
  

I characterize this as "very normal and sound volatility," not an alarming downturn. It’s simply the market doing its job by shedding over-optimistic expectations.

Are We in a Market Correction, and Should I Adjust My Plan?

No. The current market action is a minor pullback, which is both normal and healthy.

A formal market correction is defined as a decline of at least 10% from a recent peak. While the volatility feels pronounced, the major indices remain well outside of that territory:

Historically, the market averages more than one 10% correction every single year. This current moment of "chaos" is routine. For the steward, this volatility creates what we call "interesting entry points" for new investment, not a reason to retreat into fear.

Your plan should not be adjusted in response to this short-term noise. Your Stewardship Charter is built on a long-term mandate, not a 90-day trading cycle. We don't fear-monger; we simply ensure your financial structures align with the "Radically Honest" truth of a long-term strategy.

Is the Hype Around AI Stocks a New Bubble?

The short answer is: froth, yes, but a systemic bubble, no.

Questions about an Artificial Intelligence (AI) stock bubble have renewed, but the analysis does not support the criteria for a systemic bubble—yet. A true bubble, like the dot-com era, is characterized by extremely high investment as a percentage of GDP, which we are not seeing today. While froth and speculative activity clearly exist around AI-related companies, the broader macroeconomic conditions are not aligned with a systemic bubble.

However, the absence of a bubble does not mean the absence of risk.

• Investor Caution is Key: Not everything linked to AI is a "screaming buy". There are always risks, including the risk of fraud in high-growth areas.

  
  

• The Nvidia Case Study: Even a high-profile, quality company like Nvidia has seen a pullback of 15% from its peak, placing it in correction territory. This illustrates that taking profits when appropriate remains a wise practice, regardless of the overall market narrative.

  
  

We do not chase the excitement; we ensure the portion of your portfolio invested in innovation is aligned with your long-term plan and your risk tolerance.

What is the Economic Outlook for Canada?

For Canadian families, the economic outlook is cautiously optimistic, which should offer a reassuring counterpoint to the Fed-induced noise from the south.

Most analysis suggests Canada will successfully avoid a technical recession (two consecutive quarters of negative growth), with Q3 GDP expected to be around +0.5%. More importantly, the outlook projects an acceleration of growth through every subsequent quarter into 2026.

The key drivers for this optimism are:

• The Canadian Consumer: A solid savings backdrop is expected to support consumer spending.

  
  

• Business Investment: This is expected to pick up, supported by federal budget incentives.

  
  

• Improving Trade: International trade is showing signs of positive momentum.

  
  

We believe in the long-term fundamentals of the Canadian economy. Our focus remains on helping you utilize the tools available here—such as your RRSP and TFSA—to secure your family's multi-generational future.

The FAQ

Q: Should I wait until rates drop before I start building my plan?

A: No. A Stewardship Charter is about getting your plan right, not timing the market or the next rate drop. Clarity is always the first step, and waiting only prolongs the anxiety.

Q: Is it a bad time to make an investment now that the market is falling?

A: Volatility is normal. We view healthy pullbacks as an opportunity to secure better long-term value, not as a signal to stop. We don’t invest out of fear; we invest out of a clear plan.

Q: I have money sitting in a savings account. What should I do with it?

A: We need to align your cash reserves with your Nucleus. The best first step is to get all the pieces on the table so we can give you a clear, fixed-fee plan for that capital.