Good morning. Each year, we take a humorous look back at the stocks that slayed and the tickers that toppled. Canadian elbows and stocks were up – but we’re also pouring one out for the casualties of the trade war. Today, we focus on the stars and dogs of 2025 and what they can tell us about next year’s stock market. Then, we’ll be off for New Year’s and back in your inbox starting Monday. See you in 2026!

Up first

In the news

Bay Street: This unassuming café is the real centre of Toronto’s financial district, becoming a hub for conversation, dealmaking and networking

Commentary: The U.S. trade war highlights the absurdity of interprovincial barriers for alcohol in Canada, Rita Trichur writes

Economy: U.S. Federal Reserve’s December rate cut was a close call for some officials, minutes show

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In focus

Embracing absurdity

Hi, I’m James Cowan, The Globe’s investing and personal finance editor. Our team knows readers rely on us to provide sober, no-nonsense, factually accurate, deeply researched analysis to help make critical decisions about their portfolios.

And we take that responsibility very seriously – except for about 500 words, every weekend. That’s when we publish Stars and Dogs. The weekly investing column is still factually accurate and deeply researched – but nobody would describe it as sober and it’s full of nonsense.

John Heinzl, who also writes our popular Investor Clinic, has been surveying the Stars and Dogs each week for more than 20 years. Long billed as “a humorous look at the companies that caught our eye, for better or worse, this week,” the column both summarizes the big market action and highlights a few smaller stocks whose fortune (or misfortune) deserves readers’ attention.

In what has become an annual tradition, Heinzl recently unveiled his picks for the stars and dogs of the past year. For this oversized version of the feature, he teamed up with Tim Shufelt, an investing reporter and columnist whose deadpan wit is familiar to readers of this newsletter.

Their picks for the stars of 2025 are a good vibe check on investor sentiment. The S&P 500 and TSX were both up, driven by excitement for artificial intelligence (for U.S. stocks) and gold (for Canadian ones). But that enthusiasm for gold – itself chosen by Heinzl as one of his stars – was largely driven by concern about the financial instability caused by U.S. President Donald Trump’s economic policies. It was a year when investors showed great optimism for tech’s next big thing and, at the exact same time, skepticism that the good times will last.

Indeed, many of this year’s dogs are companies straining under Trump’s economic policies. Algoma Steel Inc. and Spin Master Corp. toys both felt the tariff crunch. Target Corp. faced a pullback in consumer spending as Americans worried their economy wasn’t quite as strong as the S&P 500 suggested. There was also one company – Strategy Inc. – that served as a good warning against getting too enthusiastic about a technological development of unproven merit.

In Strategy’s case, it was bitcoin that drove the stock’s descent. But as we look ahead to 2026, there’s mounting concern that all of the enthusiasm for AI might be unwarranted, premature or both. Taken alongside Trump’s continued enthusiasm for tariffs, the worries about an AI bubble in the markets have many investors concerned. As Ian McGugan recently noted, a survey conducted by one money manager found that on average, investors predicted about a 31-per-cent probability of a stock market crash in the next 12 months. As McGugan says, there aren’t similar signs of concern among Wall Street professionals. But we’ve heard warnings of impending doom from both the Bank of England and the International Monetary Fund.

It can all feel a bit absurd, watching the markets march upward as parallels to the last tech bubble become ever clearer. It’s a bit like everyone noticed the emperor has no clothes – and then decided they preferred a naked monarch. Which brings us back to the stars and dogs. They highlighted not just the good and bad stocks of 2025, but the weirdness of the year. What will matter in 2026 is how all of these conflicting indicators resolve themselves.

The comedian Jon Stewart once told an interviewer: “I have complete faith in the continued absurdity of whatever’s going on.” In the coming year, our readers can have faith that The Globe’s investing team will make sense of the continued absurdity of what’s going on – and then make fun of it, for 500 words every weekend.

One last thing: I love to hear from our investing readers. What did you think of our recent experiment with a market live blog? Do we need to cover more crypto? What’s worrying you heading into the new year? I’m at jcowan@globeandmail.com.

Charted

My precious

Canada now exports more gold than it does former top exports such as assembled passenger vehicles, forestry products, farm and fish products and industrial equipment. But how much is that benefiting the economy? Measuring the metal’simpact isn’t cut and dry, economists say.

Also read: These executives got extra rich off gold and silver’s astronomical gains this year

Quoted

Generic versions of Ozempic and Wegovy are expected to lower insurance costs for employers and workers in drug plans. When the generic diabetes and obesity medications are introduced, they will cut insurance costs and could lead to prices falling by 65 per cent. The industry expects at least one generic semaglutide product to become available in Canada by the summer, with multiple versions out by the end of 2026.

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Morning update

Global markets were mixed on the final trading day of the year.

Wall Street and TSX futures were in negative territory after major North American stock markets closed lower yesterday, weighed down by tech stocks in choppy trading.

Overseas, the pan-European STOXX 600 was up 0.38 per cent in morning trading. Britain’s FTSE 100 declined 0.2 per cent and France’s CAC 40 slid 0.57 per cent, while German markets were on holiday.

In Asia, Japanese markets were closed, while Hong Kong’s Hang Seng closed 0.87 per cent lower.

The Canadian dollar traded at 72.96 U.S. cents.