{"id":1935,"date":"2026-01-30T20:38:46","date_gmt":"2026-01-30T20:38:46","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/trivestwealthcounsel\/?p=1935"},"modified":"2026-01-30T22:37:44","modified_gmt":"2026-01-30T22:37:44","slug":"january-2026-the-quiet-unravelling-of-the-post-qe-world","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/trivestwealthcounsel\/january-2026-the-quiet-unravelling-of-the-post-qe-world\/","title":{"rendered":"January 2026: The Quiet Unravelling of the Post\u2011QE World"},"content":{"rendered":"

INSIDE<\/b><\/span><\/h3>\n

The Quiet Unravelling of the Post\u2011QE World<\/span><\/strong>
\nLike natural systems that emit faint tremors before an eruption, today\u2019s markets are sending subtle but troubling signals. Gold\u2019s sharp ascent and the surge in long\u2011dated sovereign bond yields \u2014 including Japan\u2019s once\u2011unthinkable climb past four per cent \u2014 suggest deep structural pressures long set in motion by post\u20112008 quantitative easing (QE) and pandemic\u2011era fiscal excess. With governments increasingly reliant on central banks to absorb massive debt issuance, the risk of currency debasement is accelerating, eroding purchasing power, and widening the divide between asset owners and cash holders. Demographic shifts add further strain as aging boomers may soon sell assets into a market less willing or able to leverage at higher rates. As global central banks rotate reserves out of U.S. treasuries and into gold, the need for investors to rethink traditional sovereign debt exposure becomes urgent. In our portfolios, we\u2019ve responded by emphasizing gold, metal producers, high\u2011dividend moated businesses, and structured notes with built\u2011in protection \u2014 because in an environment where the ground is rumbling, inaction is the greatest risk.<\/span><\/p>\n

How Your Generation Shapes the Way You Invest<\/span><\/strong>
\nMartin has been reflecting on bestselling author Scott Galloway\u2019s idea that each generation is shaped by the era it grows up in, and sees a direct parallel in investing: before we ever choose an asset class or build a portfolio, our generational wiring influences how we perceive risk, what we fear, and how we react to uncertainty. Boomers, shaped by decades of stability and asset appreciation, often default to the playbook that worked during a long disinflationary boom, risking complacency in a shifting macro regime. Gen X, raised amid institutional skepticism, tends toward contrarian instincts that help avoid bubbles but can also lead to fighting trends that persist far longer than expected. Millennials, moulded by crises but cushioned by unprecedented policy backstops, often prefer rules-based, automated systems that offer structure yet can fail when markets break from historical patterns. And Gen Z, facing the steepest financial headwinds and feeling shut out of traditional wealth pathways, gravitates toward high-risk, high-velocity strategies that threaten their most precious advantage: time. These biases don\u2019t determine outcomes, but they shape predictable blind spots \u2014 and the real challenge for investors is recognizing when their generational lens is quietly helping them, and when it\u2019s quietly working against them.<\/span><\/p>\n

TFSA vs RRSP: Putting the Right Assets in the Right Accounts<\/span><\/strong>
\nAsset location is one of the most overlooked drivers of long\u2011term performance, often adding a few percentage points per year in after\u2011tax returns simply by placing the right assets in the right accounts: the TFSA should hold high\u2011growth, high\u2011convexity assets \u2014 equities, growth ETFs, small and mid\u2011caps, and asymmetric structured products like principal-at-risk (PAR) or twin\u2011win notes \u2014 because all upside compounds tax free and withdrawals never touch taxable income; meanwhile, the RRSP is the ideal home for income\u2011producing, tax\u2011inefficient assets such as fixed income, foreign dividends, and monthly structured income notes, where tax\u2011deferred compounding and retirement\u2011rate withdrawals minimize annual tax drag. Used together, the TFSA becomes a long\u2011term convexity engine that harvests volatility and amplifies tax\u2011free growth, while the RRSP acts as a stability and income reservoir that smooths cash flows and shelters predictable yields \u2014 creating a tax\u2011optimized barbell that mirrors a disciplined, risk\u2011managed, goals\u2011based portfolio design.<\/span><\/p>\n

Strong Momentum Heading into 2026<\/span><\/strong>
\nOur TWC Risk\u2011Managed Balanced Growth strategy continued to deliver on its mandate in 2025, with the fund returning 14.7 per cent and outperforming the 10.8 per cent passive benchmark, reinforcing its long\u2011term pattern of participating in strong markets while shining during corrections such as 2022 thanks to embedded downside protection. Entering 2026, we repositioned selectively: a long\u2011dated U.S. Treasury PAR note matured inside its barrier \u2014 effectively acting as recession insurance \u2014 allowing us to redeploy into twin\u2011win structured notes capable of earning returns in both rising and falling markets through asymmetric payoffs. We also realized a substantial gain on silver, rotating into gold and BHP Group to capitalize on an emerging global copper deficit expected to widen dramatically by 2040. Additionally, we exited Berkshire and moved into Honeywell, where a sum\u2011of\u2011the\u2011parts (SOTP) breakup is projected to unlock significant value. Looking ahead, we maintain a prudent 60 per cent overweight to structured notes \u2014 emphasizing lower\u2011risk indices and principal\u2011protected strategies \u2014 paired with convex twin\u2011win notes, positioning the portfolio defensively yet opportunistically for an uncertain year.<\/span><\/p>\n

Please reach out to any of our team members should you have any comments or questions about markets, your portfolio or just wanting to catch up. Wishing you a Very Merry Christmas and all the best over the New Year.<\/span><\/p>\n

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January 2026: The Quiet Unravelling of the Post\u2011QE World<\/strong><\/span><\/p>\n

Like in nature, markets often give off subtle warning signs that something is amiss. Those signals don\u2019t always imply a permanent regime shift, as true structural changes take years to build, much like pressure beneath a volcano. However, when the break finally comes, the eruption can be explosive and the damage catastrophic.<\/span><\/p>\n

In today\u2019s environment, we believe gold and sovereign bond markets are those early steam clouds. Gold has accelerated sharply, rising nearly 70 per cent over the past 12 months. Long dated bond yields, especially in historically low-rate countries such as Japan, have also pushed higher and in some cases set new highs. Last week, Japanese 40-year yields briefly surpassed four per cent, something previously thought impossible for a country long mired in deflationary pressure and driven by rapidly aging demographics.<\/span><\/p>\n

In our view, the roots of this moment trace back to the post-2008 period and the introduction of quantitative easing (QE). QE unquestionably saved the global financial system, but the problem is that it never stopped once the crisis ended. Each time markets wobbled, central banks stepped back in. The strategy \u201cworked,\u201d as long as bond markets co-operated and kept yields low.<\/span><\/p>\n

Then COVID hit, and governments got a taste of unlimited fiscal spending. And like QE, they didn\u2019t stop when the emergency ended. Instead, wartime-like deficits continued, including in the U.S., where last year\u2019s deficit reached six per cent of GDP.<\/span><\/p>\n

The issue now is that central banks appear close to implementing yet another round of QE not to stabilize markets, but simply to absorb the massive issuance of government debt. That\u2019s where the real danger emerges: currency debasement. When a central bank prints money to finance deficits, the purchasing power of that currency erodes rapidly. This is why a dollar today buys roughly 81 CAD cents in Canada and 78 USD cents in the U.S of what it did in 2019.<\/span><\/p>\n

Fortunately, those who owned assets such as housing and equities were able to offset that erosion through inflation in those asset values. Those who held cash, either by necessity or choice, have borne the brunt of the affordability crisis and have been left way behind with no way to catch up.<\/span><\/p>\n

Adding to this complication is demographics. A large concentration of those assets is held by aging baby boomers who may soon need to sell. But the next generations are unwilling \u2014 or unable \u2014 to take on heavy leverage at today\u2019s higher rates. If the bond market continues pushing back, we could face the worst possible combination: falling home and stock prices in an environment of ongoing debasement.<\/span><\/p>\n

This dynamic could intensify if global governments continue reducing their U.S. Treasury holdings and reallocating reserves into gold. Momentum is already building: central banks now own more gold than treasuries for the first time in three decades.<\/span><\/p>\n

As an investor, doing nothing is not an option. Now is an ideal time to revisit your portfolio. Start by examining your government bond exposure, especially in jurisdictions such as Canada, where the federal government holds no gold reserves and where 10-year yields near three per cent offer little compensation for the level of risk.<\/span><\/p>\n

Commodity-based economies typically provide some protection against debasement, but Canada remains an exception. Excessive regulation and policy uncertainty have constrained the sector, with discussions still stuck at the Memorandum of Understanding (MOU) stage instead of translating into real action.<\/span><\/p>\n

In our portfolios we have been steadily increasing gold exposure \u2014 both through physical gold ETFs and gold producers \u2014 while also adding selective positions in other metal producers such as copper, which provide additional protection against the declining purchasing power of our currency.<\/span><\/p>\n

We don\u2019t own a single sovereign bond. Instead, we use structured notes with substantial downside barriers and attractive yields, along with twin-wins that can generate returns if markets remain flat or even negative, while also offering amplified upside if markets continue to trend higher.<\/span><\/p>\n

We also have been increasing our exposure to high dividend companies operating in sectors with strong competitive moats has been a resilience strategy. We like segments including utilities, infrastructure, and select telecommunications companies.<\/span><\/p>\n

When it comes to protecting your wealth, doing nothing is the greatest hazard, be it postponing overdue portfolio changes or hiding in cash as inflation chips away at its value. As with a restless mountain, the signs are visible long before the explosion; ignore them, and you may find the volcano erupting at your feet.<\/span><\/p>\n

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How your generation shapes your portfolio \u2014 and your blind spot<\/strong><\/span><\/p>\n

Martin has been reading bestselling author Scott Galloway\u2019s new book, and one theme he returns to is how profoundly a person\u2019s era shapes their instincts \u2014 from career expectations to family structure to how we perceive safety and opportunity. It struck him how directly this applies to investing. Long before we compare asset classes or build portfolios, our generational wiring influences how we interpret risk, what we fear most, and how we respond to uncertainty.<\/span><\/p>\n

Generational perspectives don\u2019t determine outcomes, but they can certainly shape biases. The markets we grew up with \u2014 their booms, crises, and policy responses \u2014 quietly program our assumptions. As a result, different generations don\u2019t simply invest differently; they misjudge risk in different, predictable ways. In a world where market structures and macro regimes are shifting, recognizing these blind spots has never been more important.<\/span><\/p>\n

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Baby boomers: Stability as strategy \u2014 and potential liability<\/strong><\/span>
\nBoomers came of age during one of the most extraordinary economic expansions in history. They witnessed the rise of post\u2011war institutions, globalization, a 40\u2011year decline in interest rates, and steady appreciation in housing and financial assets. Stability and continuity became synonymous with safety.<\/span><\/p>\n

Today, boomers still control a commanding share of household wealth, reinforcing a bias toward what worked in the past: large\u2011cap equities, long\u2011duration bonds, and income strategies built for a disinflationary world.<\/span><\/p>\n

Their risk isn\u2019t recklessness \u2014 it\u2019s complacency. Beliefs harden with age, and in today\u2019s environment of inflation volatility, geopolitical fragmentation, and aggressive fiscal intervention, clinging to the old playbook can be dangerous. But reframing doesn\u2019t require abandoning structure. It simply means loosening rigid assumptions and allowing portfolios to evolve with the regime they\u2019re actually in, not the one they remember.<\/span><\/p>\n

Gen X: Contrarians by nature<\/strong><\/span>
\nGen\u00a0X is often overlooked demographically, yet in investing they may be the most psychologically distinct. Raised amid rising divorce rates, declining trust in institutions, and early financial market democratization, Gen\u00a0X learned independence early: do your own homework, question certainty, resist imposed rules.<\/span><\/p>\n

This skepticism is often an advantage. It helps Gen\u00a0X sidestep bubbles, resist crowded trades, and reposition ahead of turning points. But contrarianism can become a liability when \u201copposing the crowd\u201d becomes the objective rather than the result of analysis.<\/span><\/p>\n

Structural trends \u2014 whether technological or capital\u2011cycle driven \u2014 frequently last far longer than expected. A reflexive urge to fade them, especially without a process or decision rules, can lead to missing the market\u2019s most powerful compounding periods.<\/span><\/p>\n

Gen\u202fX\u2019s risk isn\u2019t complacency; it\u2019s reflexive opposition. Contrarianism is a strength only when paired with humility and structure. Sometimes the crowd is wrong \u2014 and sometimes, to Gen\u202fX\u2019s frustration, the crowd is simply early.<\/span><\/p>\n

Millennials: Rules, systems, and the illusion of control<\/strong><\/span>
\nMillennials entered adulthood during the global financial crisis and then endured another systemic shock only a decade later. Yet paradoxically, much of their investing experience has taken place in a world of backstops: quantitative easing, fiscal stimulus, and rapid recoveries.<\/span><\/p>\n

It\u2019s no surprise they gravitate toward systems that promise protection \u2014 rules\u2011based investing, passive strategies, automated portfolios, and tightly defined processes. They were the first generation to widely adopt robo\u2011advice and passive indexing as their default framework.<\/span><\/p>\n

Discipline is a strength, but overreliance on preset models can be dangerous when regimes change. When inflation returns, correlations break down, or market leadership narrows, rigid systems tend to lag \u2014 sometimes amplifying losses.<\/span><\/p>\n

Millennials\u2019 biggest risk isn\u2019t emotional overtrading; it\u2019s underreacting, staying anchored to frameworks built for a world that may no longer exist.<\/span><\/p>\n

Gen<\/strong>\u202f<\/strong>Z: Investing without belief in the future<\/strong><\/span>
\nNo generation faces a steeper starting point than Gen\u00a0Z. They confront historically high housing costs, widening inequality, and living expenses that outpace wage growth. Many believe homeownership may be permanently out of reach \u2014 and even renting has become increasingly burdensome.<\/span><\/p>\n

Layer in the promise of higher education that hasn\u2019t always translated into stable, well\u2011paying work, and you get a generation that feels structurally priced out of traditional wealth\u2011building pathways.<\/span><\/p>\n

When the conventional path looks blocked, risk perception shifts. Slow compounding feels irrelevant when you\u2019re starting 10 steps behind. This has pushed many young investors toward leverage, short\u2011dated options, crypto, and speculative trading \u2014 strategies that promise rapid escape velocity. The irony is these carry the highest risk of permanent capital loss.<\/span><\/p>\n

Gen\u202fZ\u2019s biggest danger isn\u2019t volatility, it\u2019s path dependency: losing capital early eliminates the powerful advantage of time, which should be their greatest asset.<\/span><\/p>\n

What this means for investors<\/strong><\/span>
\nGenerational wiring doesn\u2019t determine results, but it shapes tendencies \u2014 and those tendencies create blind spots. The key is not to abandon instinct, but to build portfolios that compensate for it.<\/span><\/p>\n

Structure must allow for flexibility. Independence must include risk limits \u2014 and occasionally accepting the crowd\u2019s view. Speculation must be contained within boundaries that protect long\u2011term compounding.<\/span><\/p>\n

Markets don\u2019t care how we feel about the future, but they do reward those who adapt to reality. The most important investment decision may not be what we buy, but whether we recognize when the lens we\u2019re viewing the world through \u2014 our generational lens \u2014 is quietly working for us or quietly working against us.<\/span><\/p>\n

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Asset Location: The Silent Edge Most Investors Ignore<\/strong><\/span><\/p>\n

Most investors obsess over what<\/em> they buy \u2014 stocks, bonds, ETFs, alternatives, structured notes. But the real drag on long-term performance often isn\u2019t the security itself. It\u2019s the account you put it in.<\/span><\/p>\n

Choosing the right asset but parking it in the wrong account is one of the most common and costly mistakes in personal finance. Fixing it can add after-tax returns without taking a dollar of additional risk.<\/span><\/p>\n

Two accounts dominate Canadian wealth building: the Tax-Free Savings Account (TFSA)<\/strong> and the Registered Retirement Savings Plan (RRSP)<\/strong>. They behave very differently, and once you understand their tax physics, your asset placement becomes straightforward.<\/span><\/p>\n

TFSA: Your High-Growth, High-Convexity Engine<\/strong><\/span>
\nThe TFSA remains one of the most powerful tax shelters in the world. All growth is tax free \u2014 forever. Withdrawals never show up in taxable income. And any amount withdrawn is added back to your contribution room the following year, making the TFSA behave like permanent tax-free equity on your personal balance sheet.<\/span><\/p>\n

Because of that structure, the TFSA is the ideal home for higher growth, higher upside, higher convexity assets <\/em>\u2014 anything with asymmetric payoff potential. Growth equities, small and midcap stocks, innovation-oriented ETFs, or factor tilts such as momentum and quality all benefit disproportionately when their compounding engine operates tax free.<\/span><\/p>\n

Structured products that offer convexity \u2014 such as PAR notes, buffered growth notes, or twin-win style payoffs \u2014 fit beautifully here as well. These instruments protect the downside while maintaining upside participation, allowing volatility to work for<\/em> you rather than against<\/em> you. When that convexity compounds inside a TFSA, the long-term benefit is enormous. Your use of PAR structures inside the TFSA is exactly what the math supports: amplify the upside, cushion the downside, and keep every dollar of gain.<\/span><\/p>\n

Over multiyear horizons, the TFSA becomes a convexity engine<\/em>. Volatility turns from a source of fear into a source of opportunity. Rebalancing into pullbacks, accumulating high-growth assets during volatility spikes, and capturing asymmetric payoffs are all rewarded when the government is no longer your silent partner.<\/span><\/p>\n

RRSP: The Income Shield and Tax Deferral Reservoir<\/strong><\/span>
\nIf the TFSA is built for growth, the RRSP is built for tax efficiency and income smoothing.<\/em> Contributions reduce taxable income in high-\u2011earning years. Growth compounding inside the account is tax deferred\u2011. Withdrawals are fully taxable, but ideally occur in retirement \u2014 when marginal rates are lower.<\/span><\/p>\n

Because RRSP withdrawals are treated entirely as income, this account is best reserved for assets that produce yield, coupon payments, or predictable return streams<\/em>. These are the types of returns you don\u2019t want taxed annually at your marginal rate.<\/span><\/p>\n

That includes traditional fixed income \u2014 bonds, GICs, T-bills \u2014 as well as dividend-paying foreign stocks, which often avoid U.S. withholding tax when held in an RRSP. It also includes monthly contingent income structured notes<\/em>, where cash flows can be high but extremely tax inefficient if held in a taxable account.<\/span><\/p>\n

Using the RRSP for income-producing structured notes \u2014 especially monthly or annually autocall series \u2014 is a textbook example of efficient asset location<\/em>. Coupons accrue and reinvest tax deferred, and capital is returned later at what is often a lower effective tax rate. The stability of these instruments also complements the more volatile, higher upside assets stored inside the TFSA.<\/span><\/p>\n

In practice, the RRSP becomes your stability and income reservoir.<\/em> It anchors the portfolio with predictable cash flows, dampens behavioural risk, and provides dry powder for reinvestment during periods of market stress \u2014 all while the TFSA stays fully allocated to growth.<\/span><\/p>\n

The Barbell: A Tax-Optimized, Risk-Managed Portfolio<\/strong><\/span>
\nWhen investors combine the TFSA and RRSP with intention, the result is a powerful barbell:<\/span><\/p>\n