As August comes to end, many are preparing for back to school and back to the day-to-day routines that often get pushed aside in the warmer months. It’s as much of a cognitive shift as it is a physical one. While we prioritize re-aligning our schedules it’s time well spent to take a look at our portfolios as well and determine if a re-alignment back to your strategic asset allocation is warranted.

 

We’re no stranger to the saying “sell in May and go away”, a phrase coined in 1950 in the Stock Trader’s  Almanac. It is based on a perceived weaker relative performance of stocks from May to October as compared to November to April. We tend to chalk this seasonality effect up to lighter volume in the warmer months when traders are away from their screens. In actuality, there are many other contributing factors to percentage changes such as investor psychology, macroeconomic forces, but more importantly as of late, technological advancements in data dissemination and trading systems. Suffice to say, this was perhaps not the summer where trader sat idle on boats or beach chairs given the impact of tariff uncertainty on economic data and corporate earnings, and oh yes, the consumer.

 

On June 2^nd, the S&P500 opened at a value of 5,896.68 and a total volume of 4,832,240,000 shares traded, as of this past Wednesday’s close the index had gained 9.92% bringing it to 6,481.40 and daily volume of 4,143,680,000. Now we can’t look at the beginning and end volume the same way we would index performance, however, we can look at average values and max/mins to gauge how active investors really were. To no surprise, average volume was more or less in line with levels seen over the past year as reflected in the chart below and this has helped drive the index to new highs with relative ease. 

 

 

What’s been more interesting is the muted associated volatility. We often think of the Volatility Index or the VIX as a “fear gauge”, which measures the expected volatility in the S&P500 for the next 30 days based on option pricing. As a reminder, we don’t look at the VIX as an indicator of stock performance, but it can be used as a measure of investor sentiment. It spiked to a 52-week high of 60.13 when tariff concerns were at their peak and investors were buying protection and we sit today around 14.50. At these current levels, we would traditionally expect markets and traders to be steady and investors calm and relaxed, however amidst the current macroeconomic backdrop, we would argue calm wouldn’t be the choice word.

 

 

If we drill down to sector contributors, we can see that Communication Services and Information Technology lead the pack in terms of trading volume as well as YTD performance along with Utilities, Industrials and Consumer Discretionaries. We’ve also come to learn of massive capex spends into AI across multiple sectors to the point where it has becoming a driving force of US GDP. While we know AI will continue to dominate earnings calls and corporate strategies, if inflationary pressures work their way into households and business as a result of tariffs, how long can these spending rates continue and how long can it support these equity valuations.

 

 

The TSX has seen similar gains over the summer months in which 4.5% of the total YTD gain of approximately 14.5% can be attributed to August. This has been driven largely by energy and notably the recent earnings surprise of our major banks. With our Q2 GDP contracting by 1.6% annualized and the labour market starting to show some signs of weakness, we can make a similar query into the sustainability of this equity market rally. When we relate this back to portfolio re-alignment, we want to assess the impact of recent index moves on our holdings. Are we returning from the summer months to notice over concentration in certain top movers or have equities drifted above an allowable allocation range. Perhaps the re-alignment simply means a shift from growth to value. In any case, as we enter into a new month, it’s always prudent to make sure your current portfolio positioning remains in line with your overall risk tolerance, investment objective and goals.

 

On behalf of Pyle Wealth Advisory, wishing you all a wonderful Labour Day long weekend!

Ally Pyle   

 

 

CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. “CIBC Private Wealth” is a registered trademark of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc.

 

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC and CIBC World Markets Inc., their affiliates, directors, officers and employees may buy, sell, or hold a position in securities of a company mentioned herein, its affiliates or subsidiaries, and may also perform financial advisory services, investment banking or other services for, or have lending or other credit relationships with the same. CIBC World Markets Inc. and its representatives will receive sales commissions and/or a spread between bid and ask prices if you purchase, sell or hold the securities referred to above. © CIBC World Markets Inc. 2025 CIBC Wood Gundy, a division of CIBC World Markets Inc. Insurance services are available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are available through CIBC Wood Gundy Financial Services (Quebec) Inc.

 

The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc.

 

Ally Pyle is an Investment Advisor with CIBC Wood Gundy in Peterborough. The views of Ally Pyle do not necessarily reflect those of CIBC World Markets Inc.

 

Clients are advised to seek advice regarding their circumstances from their personal tax and legal advisors.