With anticipated strength in crypto (bitcoin), artificial intelligence (AI), tech, and innovation-driven sectors, alongside the potential for declining interest rates, 2025 presents an exciting landscape for investing. Here’s how I am positioning effectively:
1. Prioritize U.S. equities over Canadian and European exposure
- U.S. equities are well-positioned to benefit from the new Trump administration’s policies focused on deregulation and lowering corporate tax rates.
- Generally, the U.S. has far stronger fundamentals in the current economic and geopolitical environment than Canada and the European Union (EU) bloc.
2. Zero in on sectors rather than individual stocks
- More specifically, I believe that financial services, technology and cryptocurrencies will benefit this year from Trump administration policies.
- Diversified exposure to these sectors through exchange-traded funds (ETFs) can help mitigate single-stock risk while benefiting from sector-wide growth.
3. Capture bitcoin’s strength
- My belief is that bitcoin is positioned to gain further, making it a compelling alternative asset class that will help to diversify almost any portfolio.
- Bitcoin ETFs were created by Fidelity and BlackRock in early 2024. Unlike crypto trading platforms, these can be purchased and held in registered accounts like TFSAs and RRSPs.
4. Innovation is the name of the game
- I expect innovation-driven sectors, particularly in technology and AI, to sustain robust growth in 2025, shaping future market opportunities.
- Businesses focused on transformative technologies—spanning AI, electric vehicle (EV) advancements, and other breakthroughs—are positioned for compelling long-term growth.
5. Gradually shift toward defensive positioning heading into 2026
- As the year progresses, we will consider reallocating gains to more defensive sectors.
- Healthcare, utilities, and consumer staples can provide consistent returns and income during market uncertainty.
- Adding high-quality bonds or dividend-paying stocks can reduce risk while preserving gains.
2025 presents a strong case for risk-on investing early in the year, driven by innovation, declining interest rates, and U.S. government policy. By gradually transitioning to defensive strategies heading into 2026, you can aim to balance growth opportunities with long-term stability.
