Q2 2026 – Newsletter Insights

Stepping Back: The 30,000-Foot Market View

 

One of the recurring challenges in writing our quarterly commentary is that by the time it reaches publication, parts already feel dated. This feels especially pronounced today as the pace of change appears to be accelerating.

After the S&P 500 declined by roughly 10 percent by the end of March, it took just 11 trading sessions to fully recover — among the fastest recoveries on record. As one market observer noted, “for situation monitors, the whiplash is a thing to behold…for everyone else, they may not have even noticed.” More notable was the speed at which the narrative reversed. By late March, many big-tech valuations appeared more fairly valued; by late April, they again appeared stretched.

The increasing frequency of such rapid shifts raises a broader question: Does this reflect a changing market regime?

 

Part of the explanation may lie in how the investing landscape itself has evolved over recent decades. Information is now disseminated globally in seconds. Combined with trading automation and declining transaction costs, this has contributed to a significant increase in market activity. In the late 1980s, the New York Stock Exchange averaged around 500 million shares traded daily; by 2020, this figure had doubled to over one billion.¹

 

Participation has also become democratized. Building a diversified portfolio once required meaningful capital. Today, internet access and low-cost, diversified products have lowered barriers to entry. In 1990, equity and investment fund units represented just six percent of Canadian household assets. In 2025, they accounted for over 25 percent.² This has also influenced investor behaviour. The average holding period for a stock, once spanning years, is now measured in months.

 

At the same time, market structure has shifted. What many may not realize is that the public company universe has contracted. U.S.-listed companies have halved from about 8,000 in 1997 to 4,000 today.³ Yet global market capitalization has expanded from about $50 trillion in 2011 to over $140 trillion today, with the rise of dominant U.S. and Asian corporates.⁴ Despite the shrinking public company universe, the range of investment products has expanded significantly. ETFs and derivatives now allow far more robust portfolio construction. Private equity and other alternatives, once largely reserved for institutions and ultra-high-net-worth investors, are more broadly accessible.

 

Meanwhile, even as total market values have risen, capital sitting on the sidelines has grown. U.S. money market funds have doubled to $8.2 trillion from their $4 trillion pandemic levels.⁵

 

Taken together, these shifts raise important questions: how should markets behave in an environment defined by faster information flow, lower barriers to entry, broader investor participation, yet fewer public companies and deeper sidelined liquidity? Do these changes imply a permanent shift in market behaviour? Are today’s valuations a reflection of these forces in action? It is plausible that markets have entered a period where sharper but shorter bursts of volatility and rapid narrative reversals become more common. Perhaps the anatomy of future bull and bear markets will also differ from those of the past.

 

At the same time, it’s important not to lose sight of the broader context. If you invested $100,000 in the S&P/TSX Composite Index 30 years ago, it would have grown to over $1.4M today.* Markets may evolve and narratives may shift, but long-term wealth creation has remained remarkably consistent. Indeed, it may be the golden age of investing, where more investors participate in one of the greatest wealth-creation periods in financial history.

 

A personal note: Just as we’ve stepped back from the headlines for this commentary, we hope you, too, will find time to step away this summer. We remain here taking care of things on your behalf and are available should you require assistance. Enjoy the sun!

 

*With reinvested dividends.

1. www.visualcapitalist.com/the-decline-of-long-term-investing/

2. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/mkt-view/market_view_250313.pdf

3. https://data.worldbank.org/indicator/CM.MKT.LDOM.NO?locations=US

4. https://en.wikipedia.org/wiki/Market_capitalization

5. https://www.apolloacademy.com/understanding-demand-for-treasuries-and-why-the-yield-curve-is-steepening/

 

The Intersection of OIL & ARTIFICIAL INTELLIGENCE

What Jevons Paradox Tells Us About the World Around Us

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Jevons Effect (Jevons Paradox, “Jee-vons”):

An economic theory suggesting that efficiency gains can increase, rather than reduce, total consumption.

In 1865, British economist William Jevons observed a seeming paradox with the rise of the steam engine and its effect on coal consumption. As coal use became more efficient, he expected total coal consumption to decline. Instead, it surged. This observation remains relevant to the world around us.

 

Will the Middle East Conflict Reshape Global Energy Strategy?

In the spring, the Strait of Hormuz exposed the risks of routing roughly 20 percent of global supply through a single chokepoint. The resulting disruptions not only drove fossil fuel prices sharply higher but reinforced a broader reality: energy security is inseparable from national security. This has raised the question of whether it will accelerate a structural shift in global energy strategy.

 

Indeed, recent developments have prompted many nations to revisit their energy policies, including renewed interest in alternative sources aimed at reducing dependence on imported fossil fuels. However, expectations of a rapid decline in fossil fuel use may be overly optimistic. Even as efficiency improves, total oil demand has proven resilient — an outcome consistent with the Jevons effect. Today, while energy use per unit of GDP has declined over two decades, total energy consumption has not. Global oil consumption now exceeds 100 million barrels per day, up from around 60 million just half a century ago. In the U.S., per capita energy use has only declined at around half the pace of efficiency gains.¹

 

What Jevons May Explain About Artificial Intelligence (AI)

This same effect may also apply to the evolving technological landscape. Given the rapid advancement of AI, there has been significant debate over whether it will replace labour. However, some economists argue that a Jevons-style dynamic is more likely: as the cost of AI-powered cognition falls, the total market for human intelligence may expand.² For example, as AI makes professional services, such as legal work, accounting, consulting and financial analysis, cheaper and more efficient, overall demand could increase. Some studies already show that AI-exposed industries continue to see job and wage growth, suggesting that productivity gains may be complementing workers rather than replacing them. At the same time, certain entry-level roles, particularly for recent graduates, appear to be under pressure.

 

Of course, technological inflection points have always reshaped labour markets, with some jobs being displaced. Yet history also reminds us that new jobs are created and others augmented. For instance, when ATMs were introduced, many predicted the end of bank tellers. While teller roles initially declined per branch, ATMs reduced operating costs and enabled banks to open more branches. Similarly, in healthcare, advances in medical imaging raised concerns about radiologists becoming obsolete. Instead, imaging demand increased substantially due to lower costs and an aging population, and radiologists continue to be essential for interpreting and integrating results.

 

1. https://www.eia.gov/todayinenergy/detail.php?id=48976

2. https://www.apollo.com/wealth/the-daily-spark/the-jevons-employment-effect-from-ai

 

change is imminent: FOUR GRAPHICS

The Difference 30 Years Makes: How the Investing Landscape Has Changed

As the front-page story highlighted, the investing landscape has changed dramatically over recent decades. Here are four ways: