When it comes to investing, putting all your money into one industry is like relying on a single star player to carry your hockey team. Sure, they might put up big numbers in some games, but if they hit a slump, run into tough opponent or get injured, your team (or portfolio) could struggle. That’s where sector diversification comes in. Just like a championship team needs a mix of scorers, grinders, defenders, and a rock-solid goalie, a strong portfolio benefits from investments across multiple sectors. This strategy helps balance risk and improve long-term performance, no matter what the markets throw your way. Let’s take a closer look.
Building a Strong Investment Portfolio with Sector Diversification
Think of your investment portfolio like a hockey team. If you rely only on star forwards to score goals, you might dominate some games but struggle against tough defenses. But with a balanced lineup—including strong defensemen, a solid goalie, and hardworking, physical grinders—you’re better prepared for any challenge. Sector diversification works the same way. By investing across different industries like technology, healthcare, finance, and energy, you reduce the risk of one sector dragging down your entire portfolio.
How Sector Diversification Strengthens Your Portfolio
Different sectors perform differently depending on the economy, just like players on a hockey team shine in different situations. Tech stocks might thrive during economic booms, like star forwards lighting up the scoreboard in a high-scoring game. But when the economy slows, defensive sectors like utilities rise to the occasion—just like a strong goalie and defense keeping the team in a physical, low-scoring game. By diversifying, you build a portfolio that can adapt to changing market conditions, just like a well-rounded hockey team adjusts to different styles of play.
Why You Should Diversify Across Sectors
- Lower Risk and More Stability – A well-diversified portfolio is like a balanced hockey team. If one player has an off night, the rest of the team can step up and keep the team in the game. Similarly, spreading your investments across sectors—like technology, utilities, consumer cyclicals, and consumer staples, for example—helps cushion your portfolio when one sector struggles, keeping your overall performance on track.
- Growth Opportunities: Some players are great scorers, some are hard nosed defenders, and others grind out wins. Investing across sectors gives you more chances to benefit from different market trends, just like having a deep lineup with different types of players increases your team’s chances of winning.
- Simplicity: It’s a straightforward way to ensure you’re not overly reliant on any single player or style of play. In the case of your investment portfolio, it removes the risk of being reliant on one or two sectors to carry your portfolio.
At the end of the day, sector diversification is like building a championship hockey team—you want a mix of players that can perform in different situations, not just a lineup of goal scorers. By spreading your investments across various sectors and industries, you give yourself a better chance to navigate market ups and downs while positioning your portfolio for long-term growth. So, whether the market is flying down the ice on a breakaway or grinding through a tough defensive battle, a well-diversified strategy can help keep you in the game. 😊🏒
Now that we’ve covered how a well-rounded portfolio can help you handle whatever the market throws your way, much like how a well built team can contend for the Stanley Cup, let’s see what happened this past week….
Items that may only interest or educate me ….
Canadian Economic news, US Economic news, ….
Canadian Economic news
This past week’s key economic data that the Bank of Canada (BoC) considers when deciding whether to raise or lower the interest rate.
Bank of Canada minutes
The BoC’s Governing Council cut the benchmark interest rate by 0.25% at their January 29th, 2025, meeting, bringing it down to 3.0%. This marks the sixth consecutive cut, aimed at stimulating the sluggish economy amidst uncertainty over potential US tariffs that, if prolonged, could permanently harm economic growth.
The minutes revealed that while past rate cuts have helped boost consumer spending and housing, business investment remains sluggish. The BoC expects Canada’s economy to pick up steam in 2025, projecting GDP growth of 1.8% for both 2025 and 2026. However, these forecasts don’t yet account for potential US tariffs, which could throw a wrench into the recovery.
On the global stage, economic growth is expected to hover around 3% over the next two years, but trade tensions remain a major risk. To help support the economy, the BoC also announced it will stop reducing the amount of bonds and other assets it holds and will start buying them again in March. This is meant to keep borrowing costs lower and provide more stability to financial markets.
The Council stressed that Canadians should stay informed about how trade conflicts could impact inflation and the broader economy. With uncertainties ahead, all eyes are on how the central bank and the government navigate the next steps.
Canadian market volatility
Canada’s Volatility Index (VIXC) started the week at a calm 13.78 but gradually climbed as talks of tariffs on Canadian steel and aluminum exporters stirred market jitters. The VIXC saw occasional spikes above 17 before settling at 14.86 by week’s end, as tariff concerns lingered in the background.
For those new to the VIXC (traded as VIXI on the TSX), think of it as the market’s fear gauge. Readings below 10 signal smooth sailing, while 10 to 20 reflect normal market fluctuations. Once it pushes past 20, uncertainty starts creeping in, and things can get choppy. 😊
US Economic news
This past week’s key data points that the Federal Reserve (Fed) considers when deciding whether to raise or lower the interest rate.
Consumer price Index (CPI)
US inflation came in hotter than expected in January, throwing a wrench into hopes for early rate cuts. The CPI rose 0.5% for the month, exceeding both December’s 0.4% gain and economists’ forecast of 0.3%. On an annual basis, CPI ticked up to 3.1%, slightly above December’s 2.9% and the expected 2.9% increase.
On a monthly basis, ‘Fuel oil’ saw the biggest monthly jump at 6.2%, while ‘Apparel’ was the only category to decline, dropping 1.4%. Year-over-year, ‘Transportation services’ led the pack with an 8.0% increase, while ‘Fuel oil’ posted the sharpest decline, down 5.3%.
On the housing front, shelter costs – which include rent and mortgages – rose 0.4% for the month, slightly faster than December’s 0.3% increase. However, the annual rate of shelter inflation continued to cool, landing at 4.4%, down from 4.6% in December.
The Core CPI, which strips out food and energy, also came in hot. It rose 0.4% for the month, surpassing December’s 0.2% increase and expectations of 0.3%. Annually, Core CPI ticked up to 3.3%, compared to 3.2% in December and an expected 3.1%.
Inflation heated up in January, with headline CPI seeing its largest monthly jump since August 2023 and core CPI posting its biggest increase since April 2023. With both measures now running at their fastest annual pace since May 2023, the Fed is likely to keep rates higher for longer to rein in inflation. That means borrowing costs for consumers and businesses may stay elevated, potentially slowing economic growth in the months ahead.
Retail Sales
January’s US retail sales report came in far weaker than expected, with sales plunging 0.9% – far below the predicted 0.1% decline. This marked the largest monthly drop in a year, following a 0.4% gain in December. Despite the rough start to the year, annual retail sales still climbed 4.2%, improving on December’s 3.9% increase and beating forecasts of 3.8% growth.
Core retail sales, which strips out automobiles, vehicle parts, and gas stations, unexpectedly fell 0.5% after December’s 0.4% gain. Analysts had expected a 0.3% increase. However, on an annual basis, core sales rose 3.9%, topping December’s 3.3% gain and aligning with expectations.
While the sharp 0.9% drop signals a notable pullback in consumer spending, the 4.2% year-over-year increase suggests demand is still holding up overall. The unexpected 0.5% decline in core retail sales is another red flag. Since core sales exclude volatile categories like gas and autos, they provide a clearer picture of underlying consumer spending. The fact that analysts were expecting a gain but instead got a decline suggests that households could be pulling back more than expected, possibly due to lingering inflation, high interest rates, or economic uncertainty.
As for the economy, this report reinforces concerns that economic growth may be slowing. Retail sales are a key driver of Gross Domestic Product (GDP), so a sharp monthly drop could signal weaker demand and a cooling economy. If this trend continues, it could pressure the Fed to consider rate cuts sooner rather than later to prevent a sharper downturn. However, the solid year-over-year growth suggests that the economy isn’t collapsing – just losing some steam.
The big question is whether this drop is just a seasonal blip or the start of a more sustained pullback in consumer spending. The February and March reports will provide more clarity, especially as markets gauge whether the economy can maintain its resilience.
For us investors, weaker consumer spending increases the chances of the Fed cutting rates sooner, which could be bullish for equities overall. If markets start pricing in earlier rate cuts, growth stocks – particularly heavyweight technology companies – could benefit as borrowing costs decline.
For now, the key takeaway is to watch for follow-up data. If the next retail sales report confirms a downward trend, we might need to adjust expectations for economic growth – and for market performance in consumer-facing sectors.
American market volatility
The CBOE Volatility Index (VIX), often called the market’s “fear gauge,” started the week at 16.58 and hovered around 16 as investors took ongoing tariff threats in stride. By week’s end, with markets growing numb to the uncertainty, the VIX dipped to 14.78, signaling a more relaxed sentiment.
For those new to the VIX, think of it as the market’s stress meter. A reading below 12 means calm waters, while 12 to 20 signals normal market swings. If it climbs above 20, nerves are rising, and anything over 30 usually signals real trouble.
Weekly Market and Portfolio Review
For the week, the TSX (SPTSX) edged higher 0.2%, the S&P 500 (SPX) advanced 1.5%, the DJIA (INDU) increased 0.5% and the Nasdaq (CCMP) climbed 2.6%.
| Index | Weekly Streak |
| TSX: | 1 – week winning streak |
| S&P: | 1 – week winning streak |
| DJIA: | 1 – week winning streak |
| Nasdaq: | 1 – week winning streak |
The markets bounced back this past week, with all four major indexes – the Toronto Stock Exchange Composite Index (TSX), the S&P 500 Index (S&P), the Dow Jones Industrial Average (DJIA), and the Nasdaq Composite Index (Nasdaq) – finishing higher. But the ride wasn’t exactly smooth, with markets swinging back and forth throughout the week.
Once again, tariffs were in the spotlight. President Trump announced a 25% tariff on all steel and aluminum imports, and later in the week, he raised the stakes by threatening reciprocal tariffs on all US trading partners. While markets initially shrugged off the news – investors have gotten used to tariff threats – the bigger concern is that tariffs could push prices higher, fueling inflation and keeping interest rates elevated for longer.
That concern only deepened when fresh inflation data came in hotter than expected, raising doubts about how quickly price pressures will ease. Higher inflation makes it less likely the Fed will cut rates anytime soon – something Fed Chair Jerome Powell reinforced in his testimony to Congress, saying the Fed is in no rush to lower rates. In fact, some investors are now questioning whether there will be any rate cuts this year – or if another hike could even be on the table. And since tariffs tend to push prices up rather than down, they only add to the inflation challenge.
On the bright side, strong earnings reports across multiple sectors suggest the bull market isn’t just about the Magnificent 7 anymore. A broader rally is a positive sign, showing that more companies – not just heavyweight tech stocks – are thriving.
Meanwhile, Canada remains in the crosshairs. After delaying 25% tariffs across the board, Trump imposed them on Canadian steel and aluminum and even floated the idea of 100% tariffs on the Canadian auto sector. It’s becoming clear that tariffs – and the threat of them – are a key bargaining tool in American trade negotiations.
Right now, markets are caught between optimism about economic growth, thanks to potential deregulation and tax cuts, and the reality of rising inflation pressures. The coming weeks will tell whether strong earnings can keep the momentum going – or if inflation and interest rate fears take centre stage.
| Portfolio | Weekly Streak |
| Portfolio 1: | 2 – week winning streak |
| Portfolio 2: | 1 – week winning streak |
| Portfolio 3: | 1 – week winning streak |
With all the market volatility this past week, I wasn’t sure what to expect from my portfolios. Turns out, it was a pleasant surprise – all three bounced back into the win column! While there were no jaw-dropping gains, Portfolios 1 and 3 posted solid increases, while Portfolio 2 managed a more modest climb. You can check out the weekly performance chart below for the respective performance.
Portfolio 1 took the crown this week, with 56% of holdings finishing in the green. Only the Nasdaq outperformed it among major indexes and portfolios. Ferrari (NASD: RACE) hit the gas, speeding ahead 10% to a record high, joined by CrowdStrike (NASD: CRWD) and TMX Group (TSE: X), which also crossed the finish line at new peaks. However, The Trade Desk (NASD: TTD) stalled out, skidding 33% after missing expectations and forecasting slower revenue growth next quarter.
Portfolio 2 saw the smallest gain of the three, both in percentage terms and in the number of winning stocks, with only 33% of holdings posting gains. However, an 18% jump from Airbnb (NASD: ABNB), along with slight upticks from some larger holdings, was enough to offset the majority of declines.
Portfolio 3 had a decent week, with 56% of its holdings finishing higher – matching Portfolio 1’s percentage of gainers. The biggest boost came from Adyen N.V. (OTCM: ADYEY), which surged 20%, more than making up for an 11% drop in Vertiv Holdings (NYSE: VRT).
After the previous week when all the portfolios lost money, I’m more than happy to see them bounce back into the win column. Overall, a solid week across the board! 😊
Companies on the Radar
No new companies caught my eye this past week, but I did make one adjustment to my radar list – I decided to remove Howmet Aerospace Inc. (NYSE: HWM). The reason? The uncertainty caused by recently implemented 25% tariff on steel and aluminum products could significantly impact the company. Since Howmet specializes in advanced engineered solutions for aerospace and transportation, it relies heavily on these metals. With costs rising, the company may face tighter profit margins if it can’t pass those costs on to customers. In a competitive market, that’s not always easy. They might have to explore alternative suppliers or materials to offset the impact, but for now, I’m removing it from my watchlist.
My radar list now consists of these four companies:
- Interactive Brokers (NASD: IBKR), a large-cap, American online brokerage firm known for its advanced trading platform used by professional of all levels.
- Sportradar Group AG (NASD: SRAD): A mid-cap Swiss company specializing in sports data, content, and integrity services that support businesses in sports, media, and betting industries.
- Rubrik, Inc. (NASD: RBRK): a high-growth, large-cap American cybersecurity firm.
- Axon Enterprise, Inc. (NASD: AXON): A large-cap innovator in body cameras, TASER devices, and cloud-based evidence management software, serving law enforcement and public safety agencies.
As always, these are not buy recommendations – be sure to do your own research and make decisions that align with your personal financial goals!
The Radar Check was last updated February 14, 2025.
Portfolio Update
Portfolio 1
Portfolio 1 for the week ended February 14, 2025: UP 
- CrowdStrike unveiled its Charlotte AI Detection Triage, an advanced tool that autonomously analyzes, prioritizes, and summarizes detections with exceptional accuracy. By instantly distinguishing true threats from false alarms, it allows cybersecurity experts to focus on real risks more efficiently.
Activity
Sold: A covered call option on some Nvidia shares Since I held onto my shares from my last ‘covered call’ in late January, Nvidia (NASD: NVDA) still made up nearly 40% of this portfolio’s value. I still want to trim my position, so this past week, I sold another covered call on some of my shares. Just like the last two, I set the strike price at $150 per share – this time with an expiration date of February 28, 2025. If Nvidia hits $150, my shares will be sold as planned. If not, I’ll keep both my shares and the option premium.
Either way, it’s a win-win. 😊 If the shares are called away, my portfolio becomes more balanced, and I free up cash to invest elsewhere. If they aren’t, I pocket some extra income while holding onto a stock I still like. A solid strategy that fits my goals!
Dividends
Dividends Received this week for the following companies:
Canadian $
No C$ dividends this past week.
US $
Apple Inc. (NASD: AAPL)
Quarterly Reports
Lattice Semiconductor Corporation
Fourth quarter 2024 financial results on February 10, 2025
Shopify Inc.
Fourth quarter 2024 financial results on February 11, 2025
The Trade Desk, Inc.
Fourth quarter 2024 financial results on February 12, 2025
Datadog, Inc.
Fourth quarter 2024 financial results on February 13, 2025
TELUS Corporation
Fourth quarter 2024 financial results on February 13, 2025
Trisura Group Ltd.
Fourth quarter 2024 financial results on February 13, 2025
Portfolio 2
Portfolio 2 for the week ended February 14, 2025: UP
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Canadian $
TC Energy (TSE: TRP)
US $
No US$ dividends this past week.
Quarterly Reports
Mitek Systems, Inc.
Fourth quarter 2024 financial results on February 13, 2025
SmartCentres Real Estate Investment Trust
Fourth quarter 2024 financial results on February 12, 2025
Zoetis Inc.
Fourth quarter 2024 financial results on February 13, 2025
TELUS Corporation
See report under Portfolio 1.
Airbnb, Inc.
Fourth quarter 2024 financial results on February 13, 2025
Fortis Inc.
Fourth quarter 2024 financial results on February 14, 2025
TC Energy Corporation
Fourth quarter 2024 financial results on February 14, 2025
Portfolio 3
Portfolio 3 for the week ended February 14, 2025: UP
- TD Bank (TSE: TD) announced they will be selling their remaining 10.1% stake in US financial company Charles Schwab. The company expects the sale will bring roughly US$ 14 billion which will be used for share buybacks, to improve performance and enhance organic growth.
Activity
No significant activity to report this week.
Dividends
No dividends this past week.
Quarterly Reports
Shopify Inc.
See report under Portfolio 1.
Vertiv Holdings Co.
Fourth quarter 2024 financial results on February 12, 2025
Brookfield Asset Management Ltd.
Fourth quarter 2024 financial results on February 12, 2025
Brookfield Corporation
Fourth quarter 2024 financial results on February 13, 2025
goeasy Ltd.
Fourth quarter 2024 financial results on February 13, 2025
Telus Digital
Fourth quarter 2024 financial results on February 13, 2025