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BONUS | Q2 2025 Review

• Tre Bynoe

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What Really Drove Market Gains in Q2? (Hint: It's Not What You Think)

Markets bounced back in Q2—but it’s not all good news. In this bonus quarterly review episode, Tre breaks down what’s behind the recent returns and why short-term market moves can be misleading.

You’ll learn what drove gains (like multiple expansion and currency), why the April drop didn’t show up on your statement, and why Canadian investors might be in better shape than they think. If you’re sitting on cash or trying to time the market, this one’s for you.

What you’ll learn:

  • Why the early-April market drop didn’t impact your Q2 statement
  • How currency and market multiples drove returns—not earnings
  • Why Canada’s trade shift may be a long-term win
  • What makes lump-sum investing risky in today’s market
  • How inflation data really works (hint: prices aren’t coming down)
  • Why Saskatchewan is still a cost-effective place to live

Follow, share, and leave a review if you found this helpful.

Tre:

Hello, and welcome to the Plain English Finance Podcast, the podcast dedicated to helping you make smart financial decisions. I'm your host, Trey byo. I'm a financial planner with TC Wealth Management and Aviso Wealth. For more details or to send in your questions, check out the show notes at trey byo.ca/podcast. So this episode is a special episode. I guess I we'll be doing these every once in a while. With various things. I do quarterly reviews for my clients and this is my first Podcasty quarterly review. Mm-hmm. So we are gonna kind of go through what I would, what I went through kind of in the video that I, that I put together, and you can ask questions and maybe it would answer some questions that other people have. There are a few items I wanted to go a little bit more into detail into about it and. Yeah, kind of go from, from there. So this is actually, I, this is the first time I actually sent out the, this podcast to, to my clients. So.

Sierra:

Hmm. Hello clients. Yeah. Welcome I guess. Yeah.

Tre:

Um, so first off, it's something I didn't even mention in the video was we saw the massive drop. When I say massive, it was, you know. The low 20% for, for the US drop that we saw in the very beginning of April. That was fun for, for a lot of people. It, it actually speaks the timing of when, uh, like if you didn't know that happened, you would have no idea. You'd just got your statements for the second quarter and wouldn't have noticed anything because the statements were ended at the end of March, so it'd been fine. It was beginning of April, the drop happened. Everybody panicked. Markets came back up, markets recovered. If you'd just seen those two numbers end of March and end of this second quarter, you would've, markets are up, wouldn't have known it happened. Yeah. Which is kind of a funny thing that Yeah, it's, it's a lot scary when you watch it go through it. If you see it, see, go through it. If, if you see the numbers and you see it go through the ups and the downs, it's a lot scary than, you know, just picking. Snapshot every once in a while. Yeah, for sure. So it's actually funny'cause a lot of people would think, oh, I have a, a low risk tolerance. Uh, not realizing that they actually have been through some quite significant ups and downs. I don't know

Sierra:

whether that's a good thing or not.

Tre:

I don't know. It's one of those, it's, it's always something that I, I weigh the pros and cons with. Like, I, I, I like to send out like an email or something like that so clients hear from me. But at the same time, I'm like, if they didn't know what happened, then maybe they'd be better off not knowing. Right. And maybe hearing from me makes them go and check and then that scares them. Unfortunately. It's like ignorance is bliss. Yeah. To a degree. But I, I, I've made the decision that no, I'm gonna, I'm gonna send it out regardless. I think it's more important that, you know, if it is something that we should be doing, that they hear it from me, so. Yep. Yeah. For sure. But yeah, so we, we got through that, um. The biggest themes have been the trade wars. So is that the tariffs? Yeah, the tariffs. So we saw the US and Canada and the rest of the world have this fight over trade. Uh, we've seen, you know, Donald Trump, yo-yo on tariffs that he's gonna put on sometimes, you know, go up and down and then somewhere in the middle is what actually gets. Implemented. People are currently holding their breath for August 1st, I think is, is his latest deadline. Oh. Of, uh, more tariffs. Um, they're actively pursuing deals. The funny thing is, I feel like at the beginning, people or the market, should I say, jumped more when he would say something and now everyone's just like, let's just wait and see what happens. Yeah. Don't do nothing until, don't do anything until. It's actually implemented. So I, I do think that means that if, you know, markets move with things that are surprising, uh, it feels like anything is gonna be a surprise. So who, who knows? But, mm-hmm. Yeah. Anyway. Um, and something I did, I did want to go through, actually, I'll, I'll tell you what the, what the returns kind of were for, for the time period. I know it really interests you. Um, so year to date, uh, Canada is up 10%, which is actually surprising for a lot of people. I, me included, I thought that Canada would be here. I, I thought it would take a lot longer for Canada to change track and try to start building relationships with other countries, other trade partners. Mm-hmm. They've actually done a pretty better job than I was expecting. Really? Um, yeah, they've. Yeah, much, much Ben. Much faster than I expected it to happen, which is great. That's actually a, I think it's a good thing for, for Canada long term. I always said when I would be meeting with clients and they'd ask me, well, what do you think this means? Uh, long term? I actually think it's kind of a good thing.

Sierra:

I remember you saying that. Yeah. When you were like, the tariffs. Don't necessarily mean it's a bad thing.

Tre:

It kind of sucks in the short term, but,

Sierra:

but in long term it's could be a good thing. Diversifying,

Tre:

I mean, like literally everything that we, we, I teach in with investing is kind of like the same thing in a lot of areas. And diversifying your trade partners, uh, diversifying trade routes, like that can't be a bad thing. Like how would, how could that possibly be a bad thing for Canada long term, so, right. Yeah. I don't need it.

Sierra:

Or building stuff in. Canada. Yeah. Didn't you say that could be a possibility? I, we have lot of four say doesn't, it doesn't

Tre:

happen overnight, but yeah, I think there's, yeah. Short term pain for long-term gain. Yeah. I don't think it's a bad thing. Just

Sierra:

possibilities. Yeah.

Tre:

Uh, the US is flat pretty much year to date. This is actually a really in which we'll get to, but now I'll keep going and then we'll get circle back to it. Um, the developed markets, so that's outside of Canada and the us but this is like Europe and. Other, um, very developed markets that that's up 14%. It's actually done very well. Mm-hmm. Which we expected. That was, that's as expected for the beginning of the year and emerging markets is up 9% and that's also, that's pretty much done as, as expected there. There's, they're the countries that are, are growing like India, Brazil, things like that. Like they don't have a fully developed economy, but they're doing, doing well, so. Yep. Yeah. They, they, they, over the long term, they ha they have underperformed the us. The US has been the best performing market in the world for the last 50 years, pretty much. That doesn't surprise

Sierra:

me considering, maybe I shouldn't bring this up. When we were talking about like the mat leaves and stuff and how the US cul like, I wanna say western culture, but it really is in the states hardcore. Where? Yeah, because I'm on mat leave right now. That's on my mind. And yeah, their mat leave is super short. That's, I say I

Tre:

would never bet against an economy that prioritizes somebody getting back to the workforce over, I think, what six weeks they get at the most. And it's like a disability leave. It's,

Sierra:

it's crazy. I, now that I've been through it, wow. Yeah. Unbelievable.

Tre:

Very quick, very quick turnaround. Yeah. Pop'em out. Get back to work right now. Yeah, it's crazy. Um. So, yeah, that's, that's kind of what the, what the markets have performed. Something I mentioned, uh, in the, in the video that I wanna go through is there are different parts that we can attribute returns to in the markets. So people think that the market returns and market returns, and they don't, A lot of people don't understand all that goes into. Returns. So there are are four key areas. Um, there's something called multiple expansion. There's earnings growth, there's dividends, and then there's currency. What do you think? I don't actually expect you to know this.

Sierra:

I'm like, what? What do you think? Please don't ask this question. Multiple

Tre:

expansion is,

Sierra:

yeah, thanks for starting off. Nice and easy. Multiple expansion. Okay. I think it's expanding into other markets. Okay. That's great. Yeah.

Tre:

That's why not. Um, okay, so it's when we value a stock. We do it by, uh, like let's say if I earn a hundred dollars, maybe I value the company at a multiple of that earnings. So

Sierra:

the potential of it kind of,

Tre:

no, not quite. So, yeah. Might be a little hard to understand. So let me, let me give my best shot. Um, so let's say I have a lemonade stand and I do a dollar of revenue. If that lemonade stand is. Trading at a 10 times multiple of earnings, that lemonade stand is worth$10.'cause I earn a dollar from it. It or the lemonade stand earns a dollar 10 times multiples. So it's price two earnings. So it would be, if the lemonade stand was worth$10, it would be a 10 times multiple. Okay. Okay. If it was a 20 times multiple, how much would that lemonade stand be worth?

Sierra:

$20.

Tre:

Okay. A hundred times multiple. How much would we be worth? A

Sierra:

hundred dollars.

Tre:

Okay. So that, who decides that? Multiple.

Sierra:

Don't know

Tre:

the markets. Okay. The general, uh, kind of like a boating system. Okay. So has that lemonade stand really changed if the multiple is$20 versus$10?

Sierra:

Yes.

Tre:

What, how's the lemon, how's the lemonade stand? The actual Oh,

Sierra:

the stand itself hasn't. Changed, I guess. No, not things. The business is the same unless E

Tre:

Exactly. So, but it's just us assigning more value, more worth to that business. So that's what multiple expansion is. And that happens for, for a wide variety of reasons, but typically it's because expectations are high for the future of that lemonade stand. Okay. So same example. Let's say it normally is 10, 10 x. So normally it's worth$10. We think that this lemonade stand, you know, is they sell the best lemonade stand in the world. Lemonade. Lemonade stand, best lemonade in the world, and we expect them to do$10 of revenue next year. Well, we might assign a higher multiple to that lemonade stand because we think it's gonna be due 10 times the revenue next year. So we may say, okay, maybe it is worth 20 times the current revenue. Right. So that's, that's multiple expansion. Is

Sierra:

this about valuation? Yeah. Okay. Sorry. I'm, you know what I'm thinking of Shark Tank,

Tre:

but Yes. But that's, yes. Very. Yes. Actually Shark Tank's done a lot to improve people's financial literacy. Honestly, more than I would love that show. That's multiple expansion. Okay. Um, earnings growth. What do you think that is? Using the lemonade stand? Um.

Sierra:

Like revenue, I would think. Yeah.

Tre:

So if it's trading at 10 x, let's say, so that$1 of revenue company's worth$10 and that company goes to$2 of revenue, what's the company now worth?$20. Okay. Like it's doubled Its revenue. Double the valuation. It's still trading at a 10 x multiple. Okay.

Sierra:

Yep.

Tre:

If it goes to$10. Of revenue and it's still trading at 10 x multiple is now worth a hundred dollars. Okay? So that's one way that the markets go up is companies just earn more, but the multiples stay the same. Then there's dividends. So dividends are that$1 lemonade stand pays out 10 cents to people who own it. That's a, that's a return. That causes the markets to go up to a degree. There's a caveat to that, but that is part of a return that somebody would get from the markets.

Sierra:

But not everything, not every stock has dividends.

Tre:

No, I'm not gonna get into dividends because, okay. Yeah. Yeah. That's it. I'm like, I,

Sierra:

I know we like, I know a little bit about dividends, but I was like, yeah. Anyways.

Tre:

Yeah. Just fundamentally making a, yeah, it's huge. Topic dividends. Tend to be overvalued in people's heads. Uh, because when you look at stocks, you'll notice that they go down by the same amount or similar amount to their dividend because it's really just another form of paying. It's priced in, so people overvalue dividends, but that's another point. Mm-hmm. Okay. And the last one is currency. Mm-hmm. Okay. How do you think this would impact somebody to return?

Sierra:

Just like how. The currency that's being used for the business is doing overall, I'm guessing like

Tre:

in relation to what

Sierra:

the globe

Tre:

ki kind of, yeah. So the, so let's say this lemonade stand is in the US mm-hmm. And it's US dollars. Yeah. Right. And the US dollar weakens against the Canadian dollar. So let's say. You know, it was a dollar 30 of Canadian dollars to a dollar of US dollars, like roughly what it is now. And it was suddenly a dollar to a dollar. So for every, suddenly our Canadian dollar was really strong against the US dollar. Would that lemonade stand be worth more or less to Canadians?

Sierra:

It would be worth less.

Tre:

Yeah. Right. So, and the vice versa is also true. If the, if the currency gets stronger, then it's worth more. Hmm. And what we saw over the last, over the last year or so is a lot of the return,'cause the returns have been good, but a lot of them have been caused by multiple expansion and currency. Hmm. So that's not a great sign for the US'cause it means the US dollar is weakening Oh. Against a lot of other currencies. And it's not a, a great sign for us as like, for example, in the, um, like yeah, in the US in China, uh, even in emerging markets where chunks of it were just people expanding what they're willing to pay for that same company. And that's always concerning because if growth doesn't meet expectations, there's a lot more room for it to drop. Before it gets back to what we consider fair market value, like a fair, a fair, historically normal multiple value. So if lemonade stands were normally trading at 10 x and suddenly they were up to 30 x, and maybe you think that the companies get to grow their revenue, but then if they don't and they go back and they just think, oh, that's just a normal lemonade stand, which trades at 10 x.

Sierra:

Mm-hmm.

Tre:

It means that their stock goes from$30 at 30 x back down to$10 at 10 x, but the company hasn't changed. The company's fundamentally still the same company, but because it doesn't live up to expectations, the price drops doesn't mean it's a bad company.

Sierra:

Yeah.

Tre:

It means that the price was expensive when you bought it. You bought something that was expensive. So right now, stock market is. On the more or certain parts of the stock market are on are more expensive.

Sierra:

So would this be like during COVID where cer, I remember cer, certain stocks were getting like blowing up like Disney and like Zoom and then there was those like weird like, what do they call them? Meme stocks, Dogecoin and stuff. It's like, is that, maybe I'm wrong. Sorry. I don't know if that's

Tre:

kind of Yeah. But that, that's in essence that is what happened like with Zoom. Um. Have I ever showed you the Zoom stock?

Sierra:

I don't think so. Okay.

Tre:

Let me bring it up and show you the Zoom stock. Yeah. You know, there's something wrong about this, this graph here.

Sierra:

That's that's exactly what I thought it was going to do. But that must be, so that's, so that's what you're saying though. It's like everyone got crazy and was like. Zoom is the future. Yeah. Like, I mean, yeah, everybody still uses Zoom, but it's not worth what we made it. What

Tre:

exactly? Right? So you see, um, just below this is on Google. It says in the middle column it says P slash e ratio.

Sierra:

Mm-hmm.

Tre:

So that's price to earnings ratio. So that's kind of one, one of those multiples. There's others, but that's one of the multiples that I was talking about. So it says 22 right now at the height. The company was the same, but it was like, I think it was like a 500.

Sierra:

Oh my goodness. Like it

Tre:

was, it was overvalued, right? Like you were, they were hoping that it was, it would do these crazy things and then reality hit and even it could still be a good company. It doesn't matter if you paid too much for it. Right. Right. So that, that's kind of where, that's the cautionary tale for the markets right now. Doesn't mean that you use that information. To trade on.

Sierra:

Right.

Tre:

But what I would say is it's another reason why it's really important to try to avoid lump sum investing as much as you can. Right. And why I say instead of doing, instead of trying to invest money, you know, like big lump sums where you have to make a decision and in essence you're trying to time the market. Mm-hmm. That's why you know, it's much better to put in. A good amount. Every, every opportunity that you have, so that this, you don't get caught up in a, in a scenario like this because people might have been sitting on the sidelines and they saw the big drop and they're think thinking that the sales, oh, maybe it might go back. Maybe it might go down. And then the recovery was only two weeks and now you miss your opportunity. Well, now do you buy, well, the markets have just went up since then. Do you buy now? Well, it's now expensive. Like it's, yeah. So many decisions and kind of.

Sierra:

And you have no information of what the future is going to be.

Tre:

No. And while like we know that the markets are expensive, doesn't mean that companies won't earn more to make it worth it.

Sierra:

Mm-hmm.

Tre:

Right. And then it never comes back. There's plenty of levels where we've, it's been all time highs and we've never seen markets drop below that again. Yeah. Right. So just an important thing to, to keep in, to keep in mind, but. Yeah, so that's, uh, that's, that's the biggest, that's the biggest things that I kind of wanted to, wanted to go through about the quarter, honestly, even though it's been kind of choppy up and down, I think the, uh, any overall, considering the markets have been, markets, I dunno, hasn't been anything to write home about. Hasn't been, we'll remember the drop in April, but aside from that, we won't, we won't remember. May, June, we'll see about July, but we're not gonna remember the months there's anything special. Um, and it's really on, on the eyes are on politics. It's not really even on economic side of things. Inflation is still kind of up, uh, higher than we'd want it to be. Something I'd touched on here is that when in on, during that annual review, my video, the when inflation, like when people often think that inflation numbers mean. As they get lower that the prices are gonna come down.

Sierra:

Mm-hmm.

Tre:

And I was explaining that that's not the case at all. So when,

Sierra:

what? Outrageous, I don't like that. Yeah. It

Tre:

just means that prices are gonna go up less. So if you think of it as, I have a hundred dollars and prices go up 10%, everything now costs$110. But now if prices only go up 5%, well, it's not. Like, it's not like prices go back down to$105. Yeah, it's that now price is at 110 plus 5%, a hundred and I wanna say 116% something, 116% I think. Um, something like that. I can't do the math off the top of my head, um, around that. So it's, but prices are still going up, so I, I think people do, if you are there hoping that things are going to get more affordable. The solution is not to hope things are gonna get more affordable. The solution is you need to figure out a way to increase your own personal income or make, spend less, make other decisions. Because it's very unlikely that prices are just suddenly gonna come down back to what they were pre COVID.

Sierra:

Ugh.

Tre:

And even, even more so for like for Saskatchewan, is that we still have some of the most affordable living in Canada. If we think it's expensive here, it can get a whole lot worse.

Sierra:

Yeah. Ooh, I don't like that.

Tre:

Yeah. Sucks. But you go to, you go to, well anywhere else, uh, you'll find houses more expensive. You'll find it more expensive to live life. And that's, yeah, that's the good thing about Saskatchewan. There's the winters cold sucks, but it is, it is affordable compared to other places in Canada for sure. Compared, there's some places obviously in the world that are significantly cheaper. But

Sierra:

in Canada.

Tre:

In Canada. So anyway, any questions for me for the, for that?

Sierra:

I don't think so. I kinda like, I I would answer your question then you'd explain it because I was. Wrong on most of them, but that's okay. That's good.

Tre:

Um, okay, perfect. Well we will leave it there and I think, yeah, so we'll do these type of episodes will be like special episodes so they won't be officially like numbered or anything. Mm-hmm. I'll let us keep track on everything else, but, so that guess this will be a bonus podcast episode. Yeah, for sure. But anyway. Perfect. We will see you in the next one. Bye.

Bye.

People on this episode

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Tré Bynoe CFP®, CIM®

Host
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Sierra Bynoe

Co-host