BACK TO THE FUTURE?
WINTER 2025
As an investor, wouldn’t it be great to travel back in time 30 years to alter the course of the future? Knowing what you know now, would you choose to do things differently?
It may be surprising to recall how the world has changed in three decades. Back in 1995, the “World Wide Web” was still largely unknown. Released in the public domain two years earlier, only 3 percent of us had logged on. Inventions like the PalmPilot and Windows 95 (with no internet browser!) were considered “landmark.” That same year, a young Jeff Bezos sold his first book from his online bookstore, Cadabra, which he ran out of his garage. This venture would eventually become Amazon. Would you have had the foresight to join him on this journey? In hindsight: Of course. In reality: Probably not.
The economic landscape back then had some interesting parallels to today. While the U.S. enjoyed some of the highest GDP growth and lowest inflation to end 1994, Canada’s future appeared uncertain. Unemployment hovered above 8 percent and the Bank of Canada began aggressively lowering its policy rate to help boost growth. The Wall Street Journal referred to our dollar as the “northern peso,” and Canada as an “honorary member of the Third World.”
This look back over time may offer valuable perspective as we enter a new year. Despite a notable year in the markets, it may be easy for investors to focus on short-term challenges. Canada’s declining productivity and lagging economic growth remain top of mind, as do new concerns about how far equity markets have advanced. Yet, we shouldn’t overlook how much change can happen, even in short periods. In 2024 alone, we entered an easing rate environment, expectations of a hard landing gave way to a soft landing, inflation largely moderated and, despite many challenges, markets continued to advance.
While the double-digit market returns of 2024 should be embraced, they highlight a key principle: market (and economic) growth is rarely linear. Meaningful progress is often measured over decades. Reflecting on the past also reminds us that unexpected shifts can transform economic conditions. In 1995, then-Prime Minister Jean Chrétien and Finance Minister Paul Martin orchestrated one of the most dramatic fiscal turnarounds in history. Canadian debt shrank from 68 percent of GDP in 1995/96 to 29 percent by 2008/09, with budget surpluses for 11 consecutive years. Our fiscal position in the G7 went from second-worst to first. We reaped a “payoff decade,” outperforming in growth, job creation and inward investment.3 Notably, the S&P/TSX Composite Index opened at 4,192.90 to start 1995, a time of substantial uncertainty; today, it has surpassed a level of 25,000. While we may not have had the foresight to join Bezos in his garage, investing $200,000 in the market could have grown to nearly $1.2 million today, without reinvested dividends — a reminder that broad opportunities often exist alongside big ideas.
Indeed, investors don’t need a time machine to make sound choices. Just as in the past, future success is likely to favour those who recognize today’s opportunities and commit to them. While there’s never any guarantee of what tomorrow will bring, the only way to miss out on the growth potential is to sit on the sidelines. Here’s to a new year ahead — and the next 30 years to come!
