After months of rebound, the Canadian stock market looks to be taking a turn for the worse. At the end of August, the stock reached heights not seen since February. Then it started to drop, coming down about 5% in the last few weeks. Since then, it has stabilized a bit, but economists warn that the second stock market crash could already be here.
Economists have been warning that we are still in volatile territory. It’s unfortunately naive to think we are going through a V-shaped recovery. Before the pandemic, a recession was predicted thanks to countries around the world taking on massive amounts of debt. The pandemic is not the cause of this downturn, but a part of it. Now, these countries not only have massive debt from before, but way more due to COVID-19.
As further waves of the pandemic sweep around the world, another downturn is practically inevitable. In fact, with cases coming up not just around the world but in Canada as well, this is likely what caused the recent drop. As further outbreaks occur, there could be a slower but more pronounced downturn in the markets.
What should you do?
Diversify. Learn from the past and start looking over your portfolio now. You should already have a Tax-Free Savings Account (TFSA), but if you don’t, get one. This will keep as much of your cash as safe as possible if you use the entire $69,500 contribution limit. Then start digging into stocks that should help you during the next downturn.
When you’ve chosen those stocks, pay attention. If you see the markets dip lower and lower, start buying. Do not wait for a market bottom. Timing the markets isn’t something you can do if you’re not a professional. You should instead look to buy these strong companies in multiple sectors, industries, and types of stocks to create a solid portfolio. You can then be sure that when some stocks are down, others will remain strong.
One to consider: Lightspeed
The tech industry has been strong throughout the pandemic. The work-from-home economy has upped the e-commerce game, and that includes with companies like Lightspeed POS (TSX:LSPD)(NYSE:LSPD). While the company slumped during the beginning of the outbreak, it’s now back with a vengeance. Restaurants and retail locations will likely depend on cloud-based sales companies such as Lightspeed now and going forward. These companies are recurring sources of revenue, with subscription services continuing to come on strong. But that’s not all the company has going for it.
Lightspeed stock is about to soar after coming onto the New York Stock Exchange. The company’s initial public offering (IPO) in Canada set records both in the tech industry and in the markets as a whole. Now, with the U.S. on board as well, investors could expect another huge boost in share price. This is helped by the company already having most of its clients in the U.S.
Bottom line
With another stock market crash here and continuing to fall lower, be prepared. Diversify your portfolio, and that includes with tech companies like Lightspeed stock. Cloud-based services have proven to be a defensive move during this period, so don’t get left behind. Give yourself the best chance of coming out of the downturn stronger than ever.
