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Over the past twelve months, the Growth Portfolio gained 29.8%, the Income Portfolio rose 11.9%, and the American Growth Portfolio advanced 41.7%.
April delivered one of the sharpest short covering rallies in market history. A sudden shift in geopolitical expectations at the end of March set off a wave of forced buying across systematic investment strategies, driving the S&P 500 just beyond it’s 2026 highs. But the character of the rally matters. By one measure, it unfolded on the weakest trading volume ever recorded on the approach to a new all time high since early October 2007—the exact peak before the 2008 financial crisis. The advance was driven not by genuine investor demand or a meaningful shift in sentiment, but by a rush to unwind downside protection and a series of mechanical trading flows. As we wrote in late 2025, markets could revisit or slightly exceed their previous October 2025 highs, but we did not expect those highs to prove durable. That remains our view today.
The combination of thinner liquidity and a market structure increasingly shaped by passive investing has begun to challenge many of the assumptions investors once relied on about breadth, leadership, and what is even possible in short periods of time. April was a clear example: we have never seen a market fall nearly 10% and then surge to new highs in such a short window. It is a reminder that today’s market can move in ways that feel both abrupt and counterintuitive. If the market ultimately proves capable of sustaining new highs, we will not hesitate to align with that trend. But the bar for that confirmation remains high.
In the short term, the market has become more fragile, not less. Three weeks ago, investors rushed to unwind the protection they normally use to guard against declines, selling off hedges at one of the fastest paces on record. That has left the market exposed, and prices stayed steady only because a wave of algorithm driven trading kept volatility in check. That support has now faded. Trading activity has thinned, and stocks are beginning to move more in unison, a sign that the period of calm may be ending. With little protection in place, the market is more vulnerable to sharp swings. It doesn’t take a major news event to trigger them; the lack of hedging alone can create instability. We saw a similar setup in February 2020, when the surface looked calm but the underlying structure was far more fragile than it appeared.
Several signs now suggest the market is shifting toward more swings. Several measures of volatility are starting to tilt in a way that shows risk is concentrating in the overall market instead of being absorbed through individual companies. Other indicators that track how much stocks move together are also turning, which usually means that when the market does move, it tends to move more forcefully. Credit markets are sending a similar message. High yield bonds, which often act as an early warning system, have stopped improving even as stocks have pushed higher, a split that rarely lasts for long.
The most important signal, however, is coming from the largest technology companies making up the “magnificent seven”. The S&P 500 has reached new highs, but these companies, which normally lead the market and attract the first wave of new investment, have not been participating to the same extent. In a market dominated by index funds and passive investing, that lack of leadership is a sign that fresh money is no longer flowing into the system the way it once did. This pattern has been in place since September 2025 and has shown up in the form of sharp rallies, sudden air pockets, and increasingly jumpy price action across sectors. Until the largest companies can regain leadership and break above their September 2025 levels, long term upside for the broader market is likely limited. Short bursts of strength can still happen, but history suggests they rarely last.
Beyond the market’s internal behaviour, the broader economic backdrop continues to show deceleration. One of the clearest signs is that real gross domestic private investment (the money businesses spend on equipment, technology, buildings, and other long term projects, adjusted for inflation) is now falling compared with a year ago. This measure normally rises when companies feel confident about future growth. It is especially notable today because we are supposedly in the middle of a major investment cycle driven by artificial intelligence (AI). If the AI boom were translating into broad based economic momentum, we would expect this number to be rising, not shrinking. Its decline suggests that outside a handful of large technology firms, businesses are becoming more cautious, not more optimistic.
Real imports of goods are also lower than they were a year ago, which is another pattern that has historically appeared ahead of recessions. In a consumption based economy, households and businesses import more when demand is healthy. When imports fall, it usually means people are buying less and companies are stocking less, both of which point to softer underlying demand. That slowdown tends to show up in imports before it becomes visible in broader economic data, which is why this measure has been a reliable early signal of recession risk.
Manufacturing data tell a similar story. Companies are placing orders to get ahead of rising costs rather than because demand is strengthening. Production is slowing, inventories are thinning, hiring is weakening, and supplier delivery times are stretching out; all signs of an economy that is late in the business cycle.
Energy prices have risen meaningfully over the past few months, and while some investors are treating this as a sign of resilience or even renewed economic strength, history suggests the opposite. Higher oil prices act like a tax on households and businesses, leaving them with less money to spend elsewhere and gradually weakening demand. In response, short term bond yields have risen relative to longer term yields, raising borrowing costs even as the underlying economy cools. As higher energy prices continue to weigh on demand, we expect short term interest rates to fall faster than long term rates not because it is the right policy choice, but because policymakers tend to view lower short term rates as the appropriate response to a slowing environment. This shift has real consequences. Because the government now issues most of its debt at short maturities, short term rates directly determine how much interest income flows into the private sector. As those rates decline, that income declines with them, reducing liquidity, softening consumption, and tightening credit conditions further for households and corporations.
Taken together, these developments suggest that even after recent volatility, the risks in the equity market remain underappreciated. Our focus remains on protecting capital, being selective about where we take risk, and staying flexible so we can take advantage of durable opportunities when they emerge.
Further Reading
Clients seeking a deeper perspective on short-covering flows in April may find the following MarketWatch article informative, where our work was quoted:
• A short-covering rally has stocks on shaky footing. Here’s what could happen next.
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.
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.
We work with clients who value prudence, depth, and a long term mindset. Our approach aligns best with households managing $1 million or more and individuals with complex or meaningful wealth to steward. If this perspective reflects your own, we would welcome a thoughtful conversation.
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
May 2026 Update
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Over the past twelve months, the Growth Portfolio gained 29.8%, the Income Portfolio rose 11.9%, and the American Growth Portfolio advanced 41.7%.
April delivered one of the sharpest short covering rallies in market history. A sudden shift in geopolitical expectations at the end of March set off a wave of forced buying across systematic investment strategies, driving the S&P 500 just beyond it’s 2026 highs. But the character of the rally matters. By one measure, it unfolded on the weakest trading volume ever recorded on the approach to a new all time high since early October 2007—the exact peak before the 2008 financial crisis. The advance was driven not by genuine investor demand or a meaningful shift in sentiment, but by a rush to unwind downside protection and a series of mechanical trading flows. As we wrote in late 2025, markets could revisit or slightly exceed their previous October 2025 highs, but we did not expect those highs to prove durable. That remains our view today.
The combination of thinner liquidity and a market structure increasingly shaped by passive investing has begun to challenge many of the assumptions investors once relied on about breadth, leadership, and what is even possible in short periods of time. April was a clear example: we have never seen a market fall nearly 10% and then surge to new highs in such a short window. It is a reminder that today’s market can move in ways that feel both abrupt and counterintuitive. If the market ultimately proves capable of sustaining new highs, we will not hesitate to align with that trend. But the bar for that confirmation remains high.
In the short term, the market has become more fragile, not less. Three weeks ago, investors rushed to unwind the protection they normally use to guard against declines, selling off hedges at one of the fastest paces on record. That has left the market exposed, and prices stayed steady only because a wave of algorithm driven trading kept volatility in check. That support has now faded. Trading activity has thinned, and stocks are beginning to move more in unison, a sign that the period of calm may be ending. With little protection in place, the market is more vulnerable to sharp swings. It doesn’t take a major news event to trigger them; the lack of hedging alone can create instability. We saw a similar setup in February 2020, when the surface looked calm but the underlying structure was far more fragile than it appeared.
Several signs now suggest the market is shifting toward more swings. Several measures of volatility are starting to tilt in a way that shows risk is concentrating in the overall market instead of being absorbed through individual companies. Other indicators that track how much stocks move together are also turning, which usually means that when the market does move, it tends to move more forcefully. Credit markets are sending a similar message. High yield bonds, which often act as an early warning system, have stopped improving even as stocks have pushed higher, a split that rarely lasts for long.
The most important signal, however, is coming from the largest technology companies making up the “magnificent seven”. The S&P 500 has reached new highs, but these companies, which normally lead the market and attract the first wave of new investment, have not been participating to the same extent. In a market dominated by index funds and passive investing, that lack of leadership is a sign that fresh money is no longer flowing into the system the way it once did. This pattern has been in place since September 2025 and has shown up in the form of sharp rallies, sudden air pockets, and increasingly jumpy price action across sectors. Until the largest companies can regain leadership and break above their September 2025 levels, long term upside for the broader market is likely limited. Short bursts of strength can still happen, but history suggests they rarely last.
Beyond the market’s internal behaviour, the broader economic backdrop continues to show deceleration. One of the clearest signs is that real gross domestic private investment (the money businesses spend on equipment, technology, buildings, and other long term projects, adjusted for inflation) is now falling compared with a year ago. This measure normally rises when companies feel confident about future growth. It is especially notable today because we are supposedly in the middle of a major investment cycle driven by artificial intelligence (AI). If the AI boom were translating into broad based economic momentum, we would expect this number to be rising, not shrinking. Its decline suggests that outside a handful of large technology firms, businesses are becoming more cautious, not more optimistic.
Real imports of goods are also lower than they were a year ago, which is another pattern that has historically appeared ahead of recessions. In a consumption based economy, households and businesses import more when demand is healthy. When imports fall, it usually means people are buying less and companies are stocking less, both of which point to softer underlying demand. That slowdown tends to show up in imports before it becomes visible in broader economic data, which is why this measure has been a reliable early signal of recession risk.
Manufacturing data tell a similar story. Companies are placing orders to get ahead of rising costs rather than because demand is strengthening. Production is slowing, inventories are thinning, hiring is weakening, and supplier delivery times are stretching out; all signs of an economy that is late in the business cycle.
Energy prices have risen meaningfully over the past few months, and while some investors are treating this as a sign of resilience or even renewed economic strength, history suggests the opposite. Higher oil prices act like a tax on households and businesses, leaving them with less money to spend elsewhere and gradually weakening demand. In response, short term bond yields have risen relative to longer term yields, raising borrowing costs even as the underlying economy cools. As higher energy prices continue to weigh on demand, we expect short term interest rates to fall faster than long term rates not because it is the right policy choice, but because policymakers tend to view lower short term rates as the appropriate response to a slowing environment. This shift has real consequences. Because the government now issues most of its debt at short maturities, short term rates directly determine how much interest income flows into the private sector. As those rates decline, that income declines with them, reducing liquidity, softening consumption, and tightening credit conditions further for households and corporations.
Taken together, these developments suggest that even after recent volatility, the risks in the equity market remain underappreciated. Our focus remains on protecting capital, being selective about where we take risk, and staying flexible so we can take advantage of durable opportunities when they emerge.
Further Reading
Clients seeking a deeper perspective on short-covering flows in April may find the following MarketWatch article informative, where our work was quoted:
• A short-covering rally has stocks on shaky footing. Here’s what could happen next.
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.
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.
We work with clients who value prudence, depth, and a long term mindset. Our approach aligns best with households managing $1 million or more and individuals with complex or meaningful wealth to steward. If this perspective reflects your own, we would welcome a thoughtful conversation.
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
April 2026 Update
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March 2026 Update
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February 2026 Update
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January 2026 Update
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December 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.