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Over the past twelve months, the Growth Portfolio gained 28.6%, the Income Portfolio rose 2.5%, and the American Growth Portfolio advanced 37.2%.
Since late October, U.S. equity indices have moved sideways, but the apparent calm has masked a market growing more fragile beneath the surface. Beneath stable index levels, stocks have been diverging sharply, with some making new highs while others break down, creating wide return dispersion and signalling a breakdown in correlation and breadth. Such fractured market structures rarely persist. Historically, these internal contradictions have resolved through sharp volatility spikes and broad, correlated market declines.
The recent melt up across cyclical stocks, including transports, staples, and commodities ranging from agriculture and metals to memory chips, does not reflect new economic strength. Instead, it resembles classic late cycle behaviour last seen ahead of the 2008 recession. Much of the late momentum has been fueled by credit, not underlying growth, and now appears exhausted. With fiscal spending support fading, credit driven rallies lack the engine needed to evolve into sustainable expansion.
Energy is also beginning to reprise its historical late cycle role. In 2008, surging oil prices eroded household budgets and choked off consumption, ultimately puncturing the housing bubble. Today’s setup is similar. The latest rise in energy prices accelerated by the Iran conflict arrives at a time when consumers have far less cushion than in prior cycles. Through the latter half of 2025, vehicle miles travelled and air passenger miles already showed decline, a pattern that has historically preceded recession. Inflation adjusted imports fell 2.8% in Q4 2025, another indicator of weakening domestic demand. Meanwhile, real disposable income grew only 0.8% year over year into December, leaving households with limited ability to absorb further shocks. Higher fuel costs now risk tightening household consumption further and reigniting inflation at the worst possible moment.
Layered on top of these pressures is an artificial intelligence (AI) investment cycle that is proving increasingly fragile. The boom has been driven more by rising input costs than by genuine productivity growth. Hyperscalers have invested heavily in GPUs, datacentres, and power infrastructure, while memory shortages and hoarding have sharply raised equipment costs. At the same time, U.S. non residential construction continues to fall, meaning most “investment” is going toward fast depreciating hardware rather than long lived domestic capacity. Firms are spending more simply to maintain the same volume of components, and because much chip and memory production is offshore, a significant portion of this capital leaves the U.S. economy entirely. This dynamic mirrors past late cycle tech manias, where true mass adoption emerged only after excess capacity was cleared and input prices collapsed. AI is likely to follow the same arc in our opinion.
Simultaneously, the credit expansion that financed much of the post 2020 technology cycle is showing strain. For several years, much of the tech boom was supported by a parallel lending system that functioned as a shadow extension of traditional banking: banks funded private credit firms, which in turn funded the highest growth, highest valuation parts of the software and tech market. Now, as the fiscal deficit’s growth rate slows and revenue expectations soften, that entire credit chain is tightening. Valuations have compressed, refinancing windows are narrowing, and software is feeling the earliest signs of stress.
Because non bank lenders were themselves funded by banks, this pressure is migrating back into the traditional financial system. Credit spreads are widening, private credit portfolios are weakening, and funding conditions are tightening precisely as banks are being forced to absorb the associated risks. The deterioration in bank and financial stock prices reflects this shift clearly: stress has moved from mega cap technology into the credit sensitive core of the U.S. financial system. The AI story has evolved into a credit intermediation challenge for the banking system. With contagion now spreading across market cap tiers and the financial sector simultaneously, the S&P 500 has become increasingly vulnerable.
Against this backdrop, we continue to believe equity market risks are underappreciated. Our base case remains a 15%-35% index level drawdown at some point in 2026. Incoming data increasingly points to the possibility that this decline may take shape into April. This is not a call for pessimism, rather, it is a roadmap for patience. Historically, the most attractive opportunities emerge after flow driven resets, once volatility has repriced assets and improved long term forward returns.
At this stage in the cycle, our objective remains straightforward: preserve capital, seek selective upside, and maintain the flexibility to compound meaningfully when the next phase of the cycle begins.
Model Portfolio Highlights
Growth Portfolio: We continue to hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities, plus a relatively small position in Dollarama.
American Growth Portfolio:We continue to hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
Income Portfolio: We continue to hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
Our approach targets opportunities with a significant margin of safety with minimal risk of permanent loss. Patience remains essential in realizing long-term gains.
Our clients are typically households with more than $1million in investable assets who value proactive risk management, clear communication, and a disciplined approach to growth. If you know someone who might benefit from this perspective, feel free to forward this note. If you have questions or would like to schedule a conversation, please be in touch.
Thank you for your continued trust.
Yours,
Ben
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
Office: 416.369.3024
Email: bwk@wellington-altus.ca
Book time with Ben W. Kizemchuk: Portfolio and Plan Review
Ben Kizemchuk offers full-service wealth management for high-net-worth Canadians including families, business owners, and successful professionals. Ben and his team provide investment advice, financial planning, tax minimization strategies, and retirement planning.
Performance reporting disclaimer: Performance results reflect the returns of each representative model portfolio. Returns are calculated using each model portfolio’s monthly performance, including changes in securities values, and accrued income (i.e., dividend and interest), against its market value at the closing of the last business day of the previous month. Performance results are expressed in the stated strategy’s base currency and are calculated on a net of fees basis. Individual account performance may materially differ from the representative performance history set out in this document, due to factors such as an account’s size, the length of time the strategy has been held, the timing and amount of deposits and withdrawals, the timing and amount of dividends and other income, and fees and other costs. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made solely on the basis of the information provided in this document. This is not an official statement from WAPW. Please refer to your official WAPW statement for your specific performance numbers.
Market Commentary
March 2026 Update
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Over the past twelve months, the Growth Portfolio gained 28.6%, the Income Portfolio rose 2.5%, and the American Growth Portfolio advanced 37.2%.
Since late October, U.S. equity indices have moved sideways, but the apparent calm has masked a market growing more fragile beneath the surface. Beneath stable index levels, stocks have been diverging sharply, with some making new highs while others break down, creating wide return dispersion and signalling a breakdown in correlation and breadth. Such fractured market structures rarely persist. Historically, these internal contradictions have resolved through sharp volatility spikes and broad, correlated market declines.
The recent melt up across cyclical stocks, including transports, staples, and commodities ranging from agriculture and metals to memory chips, does not reflect new economic strength. Instead, it resembles classic late cycle behaviour last seen ahead of the 2008 recession. Much of the late momentum has been fueled by credit, not underlying growth, and now appears exhausted. With fiscal spending support fading, credit driven rallies lack the engine needed to evolve into sustainable expansion.
Energy is also beginning to reprise its historical late cycle role. In 2008, surging oil prices eroded household budgets and choked off consumption, ultimately puncturing the housing bubble. Today’s setup is similar. The latest rise in energy prices accelerated by the Iran conflict arrives at a time when consumers have far less cushion than in prior cycles. Through the latter half of 2025, vehicle miles travelled and air passenger miles already showed decline, a pattern that has historically preceded recession. Inflation adjusted imports fell 2.8% in Q4 2025, another indicator of weakening domestic demand. Meanwhile, real disposable income grew only 0.8% year over year into December, leaving households with limited ability to absorb further shocks. Higher fuel costs now risk tightening household consumption further and reigniting inflation at the worst possible moment.
Layered on top of these pressures is an artificial intelligence (AI) investment cycle that is proving increasingly fragile. The boom has been driven more by rising input costs than by genuine productivity growth. Hyperscalers have invested heavily in GPUs, datacentres, and power infrastructure, while memory shortages and hoarding have sharply raised equipment costs. At the same time, U.S. non residential construction continues to fall, meaning most “investment” is going toward fast depreciating hardware rather than long lived domestic capacity. Firms are spending more simply to maintain the same volume of components, and because much chip and memory production is offshore, a significant portion of this capital leaves the U.S. economy entirely. This dynamic mirrors past late cycle tech manias, where true mass adoption emerged only after excess capacity was cleared and input prices collapsed. AI is likely to follow the same arc in our opinion.
Simultaneously, the credit expansion that financed much of the post 2020 technology cycle is showing strain. For several years, much of the tech boom was supported by a parallel lending system that functioned as a shadow extension of traditional banking: banks funded private credit firms, which in turn funded the highest growth, highest valuation parts of the software and tech market. Now, as the fiscal deficit’s growth rate slows and revenue expectations soften, that entire credit chain is tightening. Valuations have compressed, refinancing windows are narrowing, and software is feeling the earliest signs of stress.
Because non bank lenders were themselves funded by banks, this pressure is migrating back into the traditional financial system. Credit spreads are widening, private credit portfolios are weakening, and funding conditions are tightening precisely as banks are being forced to absorb the associated risks. The deterioration in bank and financial stock prices reflects this shift clearly: stress has moved from mega cap technology into the credit sensitive core of the U.S. financial system. The AI story has evolved into a credit intermediation challenge for the banking system. With contagion now spreading across market cap tiers and the financial sector simultaneously, the S&P 500 has become increasingly vulnerable.
Against this backdrop, we continue to believe equity market risks are underappreciated. Our base case remains a 15%-35% index level drawdown at some point in 2026. Incoming data increasingly points to the possibility that this decline may take shape into April. This is not a call for pessimism, rather, it is a roadmap for patience. Historically, the most attractive opportunities emerge after flow driven resets, once volatility has repriced assets and improved long term forward returns.
At this stage in the cycle, our objective remains straightforward: preserve capital, seek selective upside, and maintain the flexibility to compound meaningfully when the next phase of the cycle begins.
Model Portfolio Highlights
Growth Portfolio: We continue to hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities, plus a relatively small position in Dollarama.
American Growth Portfolio:We continue to hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
Income Portfolio: We continue to hold equal portions of short-term U.S. Treasury bonds and U.S. Treasury Inflation-Protected Securities.
Our approach targets opportunities with a significant margin of safety with minimal risk of permanent loss. Patience remains essential in realizing long-term gains.
Our clients are typically households with more than $1million in investable assets who value proactive risk management, clear communication, and a disciplined approach to growth. If you know someone who might benefit from this perspective, feel free to forward this note. If you have questions or would like to schedule a conversation, please be in touch.
Thank you for your continued trust.
Yours,
Ben
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
Office: 416.369.3024
Email: bwk@wellington-altus.ca
Book time with Ben W. Kizemchuk: Portfolio and Plan Review
Ben Kizemchuk offers full-service wealth management for high-net-worth Canadians including families, business owners, and successful professionals. Ben and his team provide investment advice, financial planning, tax minimization strategies, and retirement planning.
Performance reporting disclaimer: Performance results reflect the returns of each representative model portfolio. Returns are calculated using each model portfolio’s monthly performance, including changes in securities values, and accrued income (i.e., dividend and interest), against its market value at the closing of the last business day of the previous month. Performance results are expressed in the stated strategy’s base currency and are calculated on a net of fees basis. Individual account performance may materially differ from the representative performance history set out in this document, due to factors such as an account’s size, the length of time the strategy has been held, the timing and amount of deposits and withdrawals, the timing and amount of dividends and other income, and fees and other costs. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made solely on the basis of the information provided in this document. This is not an official statement from WAPW. Please refer to your official WAPW statement for your specific performance numbers.
Recent Posts
February 2026 Update
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January 2026 Update
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December 2025 Update
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November 2025 Update
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October 2025 Update
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The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus. Wellington-Altus Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. All trademarks are the property of their respective owners.