And the winner of The Globe’s stock-picking contest is ...

Hey Trade Off players!

This is our final Trade Secrets newsletter for the season, with our stock market competition now wrapped. Congratulations to all of our winners! And thanks to everyone who participated.

While we recap this week who came out on top, we also want to rewind and look back at some of the market lessons during the contest and share some investing perspective for the year ahead!

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Our Champions

Off to the winner’s circle is “Stisch,” nabbing our grand prize of $5,000.

In second place is “Kungfu,” by a nose, bringing home $3,000 and just edging out “letmewin,” who does indeed win $2,000.

What the tape told us

As a quick recap, this contest began in early August. While the markets felt like a roller coaster at times, the end numbers this season looked much flatter. Interestingly, that’s one of the realities of investing. In the short-term, things can feel wild, but over the long-term, they settle out.

Overall, North American stocks mainly drifted lower during contest play, making it more of a stock picker’s market. If you were long energy stocks, you likely found yourself ahead of the pack. Canadian oil producers such as Suncor had a good run. Stocks leading the AI revolution, by comparison, had more lacklustre performance. Nvidia’s gains were muted, while tech stocks that had struggled owing to AI concerns (such as Salesforce) enjoyed sizable gains.

Is the AI boom headed towards a bust?

This season of Trade Off played out during one of the more interesting chapters of the AI boom.

As interest rates began rising in the bond market, many investors worried about whether some companies would face a financing crunch. In simple terms, many businesses at the centre of the AI buildout are doing so with borrowed money. If borrowing costs climb, could that leave the weakest players exposed? Elon Musk thinks so and said as much in a recent post on X, implying some of the so-called neoclouds are at risk of going belly-up. Neoclouds are companies that rent out computing power.

One popular stock market strategist dismissed the idea that the end is near. Adam Parker of Trivariate Research told his clients in an investor note that the AI cycle dates back to May, 2023, when Nvidia posted its first big sales upgrade. Parker says boom cycles like this can run as long as 10 years. So even if one lasts a shorter seven to eight years, Parker’s view is that we’re only halfway through the cycle. Bloomberg’s in-house economics team recently did its own analysis and concluded in a research report that it’s too early to tell where the economy will land. There’s still a massive order backlog for AI-related gear that will serve as a near-term safety net. That said, the Bloomberg economists will be watching three themes heading into 2027: cheaper AI, which could make customers less willing to pay up for computing power; pushback from local officials on data centre construction; and yes, rising interest rates.

Should stock pickers start at the top?

I’ll leave you with some wisdom from longtime Canadian investor John Zechner, chairman of J. Zechner Associates. He’s been quoted in The Globe and Mail for years and has a great track record for picking stocks. But he doesn’t think of himself as a stock picker per se. For Zechner, it’s about creating a blueprint that helps influence your investment picks. It starts with examining the state of the economy. From there, he measures the outlook for interest rates, company profit, stock valuations and investor sentiment. When the scorecard reads positive, he tends to go for growth stocks. When it reads negative, as it does now, he goes more defensive. Heading into 2027, he likes companies such as Rogers Communications and Microsoft. You can get more perspective from Zechner in the latest episode of Ticker Take.

Trade Secret Tips

Okay, here are a few ideas to leave you with as we wrap up this season.

First, here’s a good reminder to not let fears of a big stock market decline derail your investments.

Next, a retired Albertan looks at which of his TFSA holdings beat the benchmark and which fell short. It’s a useful exercise to run on your own contest portfolio.

And with interest rates where they are, here is a look at the highest-yielding stocks on the Toronto Stock Exchange, plus risk data. Keep in mind big yields sometimes come with bigger risks.

Thanks for playing along this season. We will do it all again before long.

Until then, happy trading.

Jon

Jon Erlichman is the founder of Ticker Take on YouTube and a contributor to BNN Bloomberg.