Just How Bad Was the TSX’s Recent Slide?

While pot stocks like Aphria Inc. (TSX:APH) have seen steep drops in price lately, other industries have taken big hits as well.

| More on:
The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

On Tuesday, the TSX posted a very minor 29-point gain after six straight days of losses. Although the losses were significant, with the TSX down more than 904 points during that time, I’ll take a closer look to see how this latest decline compares to those in recent years and determine if investors should be concerned.

Worst decline in more than a year

The TSX’s losing streak is the worst consecutive point loss the market has gone on since early 2016, when, over a period of nine straight days in the red, the TSX lost 990 points. However, back then oil prices fell below US$30 amid concerns that a bottom was nowhere in sight.

Oil prices would end up recovering and, since the latter half of 2017, have actually been soaring. That makes this year’s decline all that more mysterious. I would blame the highly valued pot stocks as a reason behind why investors might be second guessing their portfolios, especially in light of Aphria Inc. (TSX:APH) paying a hefty amount for a relatively unknown company.

The problem with that theory is that pot stocks have started to mount recoveries in the past couple days, and big losses south of the border suggest this sell-off is bigger than just the Canadian market.

Dow Jones down big in recent days

The Dow was down 1,175 points on Monday — its largest decline ever. However, in terms of percentage, the 4.6% decline was nowhere near its worst performance. The last time the Dow saw such a big drop in price was back in 2011 when the U.S. credit rating was downgraded from AAA status.

Valuations are likely weighing heavily on investors, with Bitcoin trading under US$7,500 on Tuesday, a far cry from the nearly US$20,000 it was at in mid-December. Speculative buying has certainly slowed significantly, but the markets as a whole are still highly priced, and we could still be due for a bigger drop. In the meantime, the Dow Jones was able to post a strong recovery on Tuesday, gaining more than 560 points back.

Is the TSX more volatile?

It’s been rare for the Dow Jones to see such significant drops over the years. Besides 2011, the last time it saw such a big drop was towards the end of the Financial Crisis.

The TSX, however, has seen more modest drops happen with much more frequency. In February, the Canadian exchange has seen +250-point drops happen multiple times already, and since 2015 that has happened a whopping 17 times.

In the past year, the TSX has failed to stay in the black while the Dow Jones has risen more than 24%. While both markets have been able to stop the bleeding, I’m skeptical about the future for the Canadian economy this year, as there are many factors working against it.

Bottom line

Investors would be well advised to avoid high-risk investments or stocks that are trading at high multiples, as they may have just been warning signs. While a stock like Toronto-Dominion Bank (TSX:TD)(NYSE:TD) might not be the most exciting to add to your portfolio, it might be one of the safest.

Should you invest $1,000 in Loblaw Companies right now?

Before you buy stock in Loblaw Companies, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Loblaw Companies wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

Investing

May the 4th be with you – Motley Fool Edition

Celebrate May the 4th with timeless investing lessons from the Star Wars universe—The Motley Fool way. Patience, compounding, and clarity…

Read more »

Hourglass and stock price chart
Investing

Where I’d Allocate $10,000 in Canadian Value Stocks for Future Growth

Here's where I'd allocate $10,000 in Canadian value stocks for future growth.

Read more »

Canadian dollars are printed
Dividend Stocks

Beat the TSX With These Cash-Gushing Dividend Stocks

Learn how recent macro events have affected stocks on the TSX, and find out which stocks are thriving despite challenges.

Read more »

dividends grow over time
Dividend Stocks

How I’d Build a $15,000 Portfolio Around These 3 Blue-Chip Dividend Stocks

Dividend stocks are one thing, but blue-chip dividend stocks are some of the top options out there.

Read more »

rising arrow with flames
Stocks for Beginners

How I’d Invest $5,500 in Canadian Industrial Stocks to Grow My Portfolio Exponentially

Here are two overlooked industrial stocks you can buy now and hold for the long term to supercharge your portfolio.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

TFSA Investors: 2 TSX Stocks to Buy for Dividend Income

These stocks have increased their dividends every year for decades.

Read more »

exchange traded funds
Dividend Stocks

2 Rock-Solid Canadian ETFs to Safeguard Your Portfolio During Trump’s 90-Day Tariff Pause

BMO Low Volatility Canadian Equity ETF (TSX:ZLB) and another ETF were built for tougher market sledding.

Read more »

people relax on mountain ledge
Dividend Stocks

3 TSX Dividend Stocks to Buy for TFSA Passive Income

These stocks trade at reasonable prices and offer high dividend yields.

Read more »