If you count yourself among the fans of Ben Felix’s terrific YouTube channel and Rational Reminder podcast that he co-hosts with Dan Bortolotti and Cameron Passmore, you’re probably aware that the chief investment officer and portfolio manager at PWL Capital received a cancer diagnosis early this year. He was open about his experience throughout.
“I’m all clear,” Felix said on this week’s edition of the Canadian Advisor.cast. “It was kind of the best-case scenario, given that I had cancer. It was resolved quickly.”
Like a lot of people with similar health diagnoses, Felix said that work served as a welcome distraction. “It was helpful,” he said. “It was a good outlet to focus my energy instead of sitting there worrying about how sick I was.”
It has been a year to remember. Felix joined us to take a look back at 2025 — what got covered too much (U.S. President Donald Trump and his tariff obsession), too little (Canadian stocks), equity valuations and “ETF slop.”
First, on Trump: “It’s hard to make the judgment that that’s getting too much attention, because it’s clearly an important story,” Felix said. “But, we’re hearing about it a lot.”
The more interesting — and under-reported — story is the remarkable run enjoyed by Canadian equities this year. The S&P/TSX Composite Index closed Friday at 31,311.41, up a remarkable 26.6% for the year. Its lowest close of the year came Apr. 8, six days after Trump’s so-called Liberation Day. But by month end, the index was down less than half a percentage point. Despite it all, it was not a year to bet against us.
“Coming into 2025, nobody was looking at Canadian stocks [and saying], ‘Yeah, this is the place I want to invest,'” Felix said. “It’s been an incredible year for Canadian equities.”
Are stock valuations too high?
“Asset prices are generally the best representation of a company’s actual value,” he said. “What do I think about Magnificent Seven’s valuations? They are what they are. That’s how the market is pricing those securities.”
Felix resisted drawing a parallel between today’s stock market and the one that led up to the collapse of the dot-com bubble.
“There are similarities,” he said. “But I think there are other important ways that it’s a little bit different. Many of the publicly listed companies that are getting the AI-related boost in valuations are actually profitable businesses that are making investments in AI. I think that’s different from what we saw in 2000 where there were a ton of IPOs, a ton of companies making no money, companies raising a ton of money just on an idea.”
That’s often overlooked by investors. NVIDIA, for example, isn’t technically an AI company. It produces graphics processing units, or GPUs, which power AI systems.
Felix likened what we’re experiencing now to previous periods of structural innovation. Canals were as economically disruptive in the 18th century as cars and highways were in the 20th century.
“The pattern is super-consistent,” he said. “Asset prices shoot up, as we’ve seen recently with AI-related stocks, and then they eventually normalize, come back down. Investment returns in technological revolutions tend to be quite poor unless you get in before anybody knows that the thing is revolutionary, hold for the rise and maybe sell at the perfect time. And I don’t think anybody can pull that trade off.”
Felix is a true believer in market efficiency. He is after all the CIO of a wealth manager that counsels clients not to “try to outguess the market.”
When we talked about the modest outlook for GDP growth in Canada and other developed countries next year, he framed it as a potentially positive. “Countries with higher economic growth may have lower realized returns because expectations are high to begin with,” he said.
ETF slop
One thing he believes in less firmly is the ETF sector’s explosive growth in recent years. Felix is all for low-cost investing, but he’s worried about product quality.
“There are just a ton of ETFs being launched in Canada,” he said. “They’re being marketed like crazy to advisors and retail investors. And a lot of these ETFs are, I would say, not great for investors.”
Felix listed “covered call ETFs, single-stock covered call ETFs, single-stock leveraged ETFs” as examples. “Stuff that is frankly junk in my opinion. … Higher-fee, more complex products don’t tend to be great for investors.”
Canadian Advisor.cast is available in both video and audio formats, via Advisor.ca and Spotify.