Navigating a World That Feels “Crazy”: What Today’s Market Really Demands of Investors

The global investment landscape has rarely felt more complex. 

Geopolitical conflict, volatile commodity prices, shifting central bank paths, artificial intelligence, and evolving asset classes are intersecting in ways that challenge even experienced investors.

At Morningstar Canada’s recent market outlook discussion, moderated by Ian Tam, CFA, a panel of leading portfolio managers and researchers offered timely perspectives on what advisors and investors should focus on amid the noise.

According to David Tulk, Portfolio Manager, Global Asset Allocation at Fidelity Investments Canada, today’s policy environment is fundamentally different from the post-pandemic shock of 2022. 

While inflation risks remain—particularly from energy prices—starting points matter. Interest rates are already significantly higher than they were two years ago, reducing the need for aggressive reactionary moves. 

“When you’re dealing with this type of shock, you have no idea what the duration is,” Tulk noted. “So the best thing central banks can do is think in terms of balance of risks and probabilities.” 

For Canada specifically, the Bank of Canada’s key concern is not headline inflation alone, but whether inflation expectations remain anchored. As long as longer-term expectations hold, policy responses can remain measured. 

Importantly, Tulk pointed to a growing divergence between the Federal Reserve and the Bank of Canada, with Canada potentially more resilient to higher commodity prices as a net exporter, while the U.S. faces greater pressure on consumers and sentiment. 

Canada has long been burdened by housing imbalances, high household debt, and weak productivity. But panelists expressed cautious optimism that the outlook is improving incrementally.

Tulk emphasized that while conditions are far from perfect, the direction of change is finally constructive.

“It’s not that things are great today,” he said. “It’s that the rate of change is improving.

Mortgage renewal stress is slowly working its way through the system, while productivity has become a clearer policy priority. Greater fiscal focus on investment—rather than consumption—could help unlock private-sector capital over time.

John Shaw, Head of Fixed Income at CI Global Asset Management, added that Canada’s opportunity is as much internal as external.

“We can control more than we think,” Shaw said. “Interprovincial barriers, regulatory fragmentation—these are things we can fix by getting out of our own way.”

Against a backdrop of global scarcity in “safe” commodity producers, Canada’s rule of law and resource base are attracting renewed global attention—sometimes independent of near-term fundamentals.

Energy prices have once again become a dominant driver of market volatility. But both portfolio managers stressed the importance of discipline over reaction. 

Shaw explained that despite oil dominating headlines, CI has not made sweeping tactical shifts based solely on commodity moves. 

“You want diversified exposure across industries and asset classes,” he said. “Volatility creates opportunities underneath the index level.” 

That often means rotating incrementally: trimming areas that have benefited and reallocating to those that have become cheaper, such as selective U.S. technology names that are less sensitive to oil prices but have been sold off alongside broader markets. 

Tulk echoed the importance of risk management over short-term market timing, noting that his team reduced overall portfolio beta earlier in the year—not to chase returns, but to preserve them. 

“There are times in the cycle when you play offense, and times you play defense. This felt like a time to protect basis points rather than chase them.” 

Bond yields are closer to long-term averages than they were for most of the 2010s, but their role in portfolios has changed. 

Shaw noted that bonds have regained their income appeal, but their ability to offset equity risk is less reliable in inflation-driven environments. 

“They still work,” he said. “But they’re not providing the same offset they once did.” 

Tulk added that inflation volatility, not just inflation levels, is what pushes stock/bond correlations higher—challenging traditional 60/40 portfolio assumptions. As a result, investors need to think more creatively about diversification, including selective alternatives and nontraditional fixed income exposures. 

Artificial intelligence emerged as both a macro theme and a practical tool. 

From a top-down perspective, Tulk acknowledged that while AI is likely to improve productivity, its broader economic impacts on employment, income distribution, and policy are still deeply uncertain. 

“We won’t really understand the macro consequences until we’re living through them,” he said. 

At the same time, panelists were clear: productivity gains are increasingly necessary. Aging populations, slower labor growth, and rising fiscal demands make efficiency gains essential just to maintain living standards. 

On a practical level, all panelists described AI as a powerful productivity enhancer—particularly in research, synthesis, and analytical workflows—while emphasizing that it supplements, not replaces, human investment judgment. 

From a data perspective, Kimberly Hart, Director of Managed Research at Morningstar, highlighted the behavioral trends we’re seeing in 2026: 

• Continued movement from mutual funds into ETFs
• Strong demand for fixed income and income-oriented strategies
• Net inflows into Canadian equity funds, even as global and U.S. equity funds see outflows

Energy-heavy Canadian benchmarks have benefited performance-wise, while ESG fossil fuel-free strategies have struggled. Momentum-oriented and quantitative strategies have been among the few keeping pace with benchmarks in a concentrated, volatile market environment. 

If there was one unifying message from the discussion, it’s this: markets today are not defined by a single narrative, but by overlapping, evolving forces. Policy, geopolitics, technology, valuation, and investor behavior are all interacting—often in nonlinear ways. 

In such an environment, successful investing requires more than conviction. It requires clarity, context, and discipline. 

At Morningstar, our mission remains unchanged: to empower investor success. That means helping investors and advisors navigate complexity with better data, deeper research, and insights that cut through noise—so decisions are grounded, informed, and aligned with long-term goals. 

Because in a world that feels “crazy,” confidence comes not from avoiding uncertainty, but from understanding it.