Plus: Tariffs? Again? March 3, 2025 Sign Up | View online IN THIS ISSUE 8 min read 🍊 Trump dump? 🤖 Computer creation 📉 Crypto crater Your caveperson brain isn’t helping you become an impartial, calm investor. We explain how to think a little smarter below. | Universal Pictures THE WEEK IN MARKETS Uh-oh Is the postelection Trump bump for U.S. stocks turning into a Trump dump? The S&P (-1.5%), the Nasdaq (-4%), and Big Tech’s Magnificent 7 (-5%) each stumbled for the second straight week, and all of the United States’ major indexes have now slumped to preelection levels. (The TSX was flat; Canadian stocks sat out the rally, but now they’re dodging the damage.) The highest fliers are taking the hardest hits, including Trumpworld favourites (Tesla, Palantir), top chipmakers (Supermicro, Nvidia), and AI energy providers (Vistra, Constellation). Since November, investor sentiment has shifted from unprecedented exuberance to its most bearish levels since late 2022, when everyone was panicked about a possible recession. Economic uncertainty, meanwhile, is the highest in decades. Is corporate America already feeling Trump 2.0 fatigue? Or is this just an example of how fast we burn through investing cycles in the social-media age? WHAT HAPPENED LAST WEEK IMPORTANT Tariffs are finally happening. Maybe. President Donald Trump says that a 25% tariff on most Canadian goods will take effect tomorrow, March 4. He has already delayed tariffs once, so who knows whether this time will be The Real Tariff Time. But if it is, across-the-board tariffs could shrink Canada’s GDP by 2.6% and push the economy into a recession, among other not-terrific things. (The government is reportedly preparing to support Canadian businesses to stave off calamity.) Fingers crossed it doesn’t come to that: Canada might be able to avoid big broad tariffs by making concessions to the U.S., like issuing its own tariffs on China. Mortgage crisis averted, for now. We all knew that a ton of mortgages (45% of all outstanding ones in Canada) would be up for renewal in 2024 and 2025. And, for much of the past year, rates have been above 7%. Banks were freaked, because even a small uptick in defaults, brought on by renewers saddled with higher rates, could have big repercussions. But now rates have dropped to a more-manageable 5.2%, and, according to last week’s bank earnings, mortgage holders are already feeling relief. Ninety-day mortgage delinquencies rose just one 0.01% quarter-over-quarter, to 0.24%. Even so, the banks are stashing cash in case U.S. tariffs hobble the economy and lead to more defaults. INTERESTING AI isn’t the only thing Silicon Valley is talking about. The sprint to develop AI has been the tech story of the past five years. But, in the background, the U.S. tech giants have also been racing to develop their quantum-computing capabilities, because whoever builds the first true quantum computer will basically have an F1 car to blow past everyone else’s horse and buggy. (Here’s a good quantum explainer, if you’re unfamiliar.) Microsoft seems to have edged ahead: it announced a new quantum chip, called the Majorana 1. Amazon, not to be outdone, unveiled its own quantum chip days later. Google had a breakthrough back in December. As for Apple? Well, Fintwit had a big he-he about the fact that, while Microsoft has been busy discovering a new state of matter for its quantum chip, the House of Jobs just released a new iPhone that sure seems an awful lot like its old iPhones. The crypto-coaster just won’t quit. Last month $BTC lost 20% of its value and $ETH was down 31%. What was behind the drops? Reasons include the largest single-day crypto heist in history by North Korean hackers, fading postelection Trump hype, and the rise of crypto ETFs that have effectively taken US$40 billion of bitcoin out of circulation. That was where things stood on Friday. Then, plot twist! Over the weekend, President Trump reiterated his support for establishing a strategic U.S. cryptocurrency reserve. Trump throws a lot of ideas at the wall, so it’s anyone’s guess how the announcement will affect crypto in the long run, but $BTC and $ETH did rise about 10.5% and 12%, respectively, on the news. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🎬 Amazon MGM Studios gains creative control of the James Bond franchise. Expect nonstop thrills as Bond delivers a box of Nespresso pods by 10 p.m. Source 📃 Canada can’t revoke Elon Musk’s citizenship, despite petition. It can, however, ask him for five things he did last week. Source 🪨 Giant asteroid is no longer a threat to earth. Let’s all breathe a sigh of relief and get back to destroying the planet ourselves. Source 🍁 Canadian companies hoping to compete with coconut water are selling tree sap as “maple water.” Milk considering rebrand as “cow water.” Source CRASH & BURN TO THE MOON 🇩🇪 Birkenstock loses copyright case when German court rules that its sandals are not works of art. Just the work of the Devil. Source ☕ Starbucks is axing 13 complicated drinks. Sorry, Chocolate Cookie Crumble Crème Frappucino, you were just too much for this world. Source ⚾ NY Yankees drop beard ban. ZZ Top, cast of “Duck Dynasty” headed to spring training. Source 🎶 UK musicians release album of silence to protest AI training on their material. “Thanks, but gonna pass on this one,” says AI. Source WHO CARES THE BIG IMPORTANT STORY TRADING How Your Brain Tricks You Into Losing Money — And What to Do About It Ever since COVID stimulus checks hit bank accounts across the Western world, “retail” investors (regular people like us) have been pouring money into the stock market. According to one estimate, the number of Canadians who invest on their own has roughly doubled over the past few years. On one hand, it’s good that regular people are directly investing in stocks, which have historically been the best way to grow one’s savings. On the other hand, decades of research show that retail investors tend to be overconfident traders. And overconfidence — that is, believing so fully that you’ve cracked the market that you ignore the risks — can lead to costly blunders. Here’s a breakdown of what causes overconfidence, and what you can do about it. Blame your caveperson brain. Like all humans, investors rely on certain evolutionary mental shortcuts — heuristics, if you’re fancy — to make sense of the world. These are great when you’re, say, deciding whether to join other Homo sapiens in fleeing from a bear. But when we encounter complex systems in modern life (hello, stock market), these shortcuts can become cognitive biases, or patterns of erroneous thinking. Here are some of the most common biases that affect investors: Anchoring: We cling to our first impressions of something (like, say, a company whose stock was on fire when we first started paying attention to it) even when we should be changing our view. Herding: We assume that if everyone else is making a certain choice, it’s probably the right one. (Spoiler: it’s probably not.) Selective forgetting: We remember our wins more than our losses. Overconfidence in action. Combine these biases and you’ve got a recipe for investing overconfidence. Studies have found that when retail investors are convinced they’ve found a winning stock, they tend to: (1) trade too much, (2) diversify too little, and (3) pile into name-brand companies with simple business models they can easily grasp. And when the market dips? Overconfident investors are (4) more likely to sell low. Men are especially prone to overconfidence, as are people who’ve been spending significant time on Google or message boards. Protect yourself from presumptions. Here’s the good news: you don’t have to invest like a man who thinks he solved the stock market after 10 minutes of reading Reddit. Start by gathering information from a wide range of reputable sources instead of relying on a single perspective. Many libraries offer remote access to The Wall Street Journal, the Financial Times, and other first-rate business papers if you don’t have extra cash to subscribe. And, for the love of all that is good and right, be deeply skeptical of anything stock-related you see on TikTok, or any social-media site. Accept that picking stocks is tough. So tough, in fact, that pro fund managers rarely beat the major indexes over time. To be a star stock picker, you often need to ignore the crowd and ignore the companies everyone is already blabbing about. That’s because if everyone knows that a company is great, then its stock will be expensive, which means the company must really overperform to push its shares higher. Which ain’t easy. In many cases, if you want to notch market-beating returns, you need to have a non-consensus view about which stocks will beat expectations — like, maybe you believe an overlooked company will profit huge from a big shift in business. These sorts of calls are hard to get right. Even if you’re convinced your non-consensus view is spot-on, consider spreading your money around a bit, to up your odds of picking a winner. (Or you could follow the advice of Warren Buffett and invest in low-cost index funds that bet on the whole market — but that’s another topic for another day.) One more thing: make sure you’re able to withstand temporary setbacks. If you’ve taken on too much risk, you’ll be more inclined to panic-sell when the markets inevitably fluctuate. Operating from a place of security, with some cash in the bank or stable assets to your name, will help prevent your caveperson brain from taking over — in good times or bad. —Ben Mathis-Lilley POLL How much money is life-changing? Let’s say a benevolent billionaire is handing out cash. What’s the least amount you’d consider life-changing? $10,000 $50,000 $100,000 $1,000,000 $5,000,000 OTHER VERY GOOD READS 👿 The Delirious, Violent, Impossible Story of the Zizians Tracking the gifted young techies’ descent into mayhem. | Wired* 🎥 Movie Monopoly Why Canada’s indie theatres need your help to survive. | This Magazine 🏕️ Her Job Is To Evict Homeless People from Parks But her methods are extraordinary. | SF Standard *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. THE WISDOM OF SOCIAL Some crypto investors have been really, uh, down in the dumps. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Ben Mathis-Lilley (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Dan Xin Huang (news editor), (Ambrose Martos (fact checker), Ciara Rickard (copy editor), Clare Douglas (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (lifecycle marketing manager), Eva Grace Clement Cruz (editorial producer), Matthew Karasz (markets editor), Jared Sullivan (senior editor), Peter Martin (senior editor), and Devin Friedman (editor-in-chief). Disclosures: Contributors to this newsletter own shares in Google and Microsoft. Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 VIEW IN BROWSER PRIVACY POLICY UNSUBSCRIBE FX Conversion Fee is applied to the WSII Corporate Exchange Rate as described in the Fee Schedule. The WSII Corporate Exchange Rate is a live rate including a spread which may vary due to market conditions. 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