If you had told me a year ago that the TSX would outperform the S&P 500, I would have not believed it.
With Donald Trump openly threatening to economically punish Canada, talking up 25% tariffs, and analysts warning of a Canadian recession by mid-year, this was not what I anticipated.
And yet—here we are.
As of late December, the TSX is up 29.97% year-to-date, absolutely crushing the S&P 500’s 17.92% return. Not only that, the index pushed past 32,000 on December 22, putting it within striking distance of a historic high.
I was wrong. Plain and simple.
Why This Rally Makes No Sense (But Still Happened)
Let’s rewind to the narrative that dominated markets after the 2024 U.S. election.
Trump’s tariff rhetoric escalated quickly. Canada was singled out—again—for trade imbalances, border issues, and political leverage. Analysts warned that 25% tariffs on Canadian imports could tip Canada into recession by mid-2025.
I believed that story.
I assumed:
- The TSX would suffer
- Capital would flee north to south
- The S&P 500 would massively outperform
Instead, the opposite happened.
By late 2025, key Canadian sectors reportedly received tariff exemptions, and the worst-case scenario never materialized. Markets, as they often do, front-ran disaster—and then ripped higher when it didn’t arrive.
Commodities Carried the TSX on Their Back
This rally wasn’t broad-based magic. It was old-fashioned Canadian muscle memory.
- Gold has been one of the standout performers in 2025, hitting multiple all-time highs above $4,300/oz and finishing the year up over 70%
- Oil rebounded, supporting energy heavyweights
- Materials and resources surged, exactly where the TSX has leverage
Canada is a resource market pretending to be something else. When commodities move, the TSX moves. In 2025, they moved—hard.
That’s how you get a nearly 30% YTD gain, even while everyone is bracing for economic pain.
Meanwhile, the U.S. Did Fine—Just Not Amazing
To be clear: the S&P 500 didn’t disappoint. A near-18% return is nothing to complain about.
But compared to the TSX? It lost the headline.
That said, context matters.
The U.S. market closed December near 6,930, while the TSX finished around 32,039. Both are at or near record highs. The difference is what’s driving them—and what comes next.
Why I Think the Tables Turn in 2026
Here’s the part where I stop looking backward and start placing bets.
Based on current market levels and analyst forecasts as of late December 2025, I believe the S&P 500 is more likely to outperform the TSX in 2026.
Why?
1. Earnings Growth Favors the U.S.
U.S. earnings growth is projected around 14–15%, driven by:
- Massive AI investment
- Fiscal stimulus (including the One Big Beautiful Bill Act)
- Broader participation beyond a handful of megacap stocks
Canada, by contrast, is looking at 1–1.5% GDP growth, with earnings still heavily tied to commodity cycles.
2. AI Is a U.S. Monopoly (For Now)
Canada produces resources. The U.S. monetizes intelligence.
The AI boom—software, chips, cloud infrastructure—overwhelmingly benefits American companies. That’s where capital will keep flowing.
3. Trade Risk Never Really Disappears
Tariff risk may have eased, but it didn’t vanish. Canada remains structurally exposed to U.S. political whims in a way the U.S. market simply isn’t.
My Investment View (No Hedging Here)
I don’t believe in half-measures, and I don’t dress opinions up as “balanced takes.”
If you’re investing in the U.S., I recommend putting 100% of your capital into the S&P 500.
Ten years from now, it will be dramatically higher than where it sits today.
If you have a high risk tollerance, I suggest a portfolio of the followind 11 stocks. I believe that Information technology will continue outperforming the market. In theworld there is Labor Capital and Investment Capital. I believe that Labor will continue losing value in the face of AI and Robotics and Investment Capital will continue increasing in importance. With that being said, these are the companies I belive will out perform the market for next year.
1. Nvidia (NVDA)
2. Microsoft (MSFT
3. Alphabet (GOOGL/GOOG)
4. Apple (AAPL)
5. Amazon (AMZN)
6. Broadcom (AVGO)
7. Advanced Micro Devices (AMD)
8. Palantir Technologies (PLTR)
9. Oracle (ORCL)
10. Micron Technology (MU)
11. Tesla (TSLA)
Final Thought
The TSX’s 2025 performance was a surprise. An impressive one. A humbling one.
But surprises don’t last forever.
Canada had its year. I think 2026 belongs to the U.S.
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