With Trump tariffs weighing on the stock market, younger TFSA (Tax-Free Savings Account) investors may wish to jump into the deep end by picking up shares of high-growth companies that are off by the most from their all-time highs. Indeed, the S&P 500 is pretty much in correction territory.
While a stock market correction is really nothing out of the ordinary, given they should occur every 14 months or so, this latest drawdown certainly does seem more painful than the last. Sure, we’ve been long overdue for a 10% pullback in stocks. But given the multi-year win streak, it’s pretty scary to be hanging onto shares as some (or much) of the big gains are wiped out. As is typical, the technology sector has been clobbered, with many of the huge gainers now deep in the red.
Source: Getty Images
How to go for growth with your TFSA in a correction
Whether this is a golden buying opportunity or the beginning of the end of the great bull run remains a question that many investors are pondering. Indeed, President Trump’s constant modification of proposed tariffs has paved the way for one of the most volatile market rides in recent memory. And while the bottom may still be a ways off, putting a tiny bit of money to work on every down day may be a move that makes sense.
As always, though, don’t expect to catch a stock at its bottom. Instead, buy a stock with the expectation you’ll likely get another chance to grab “seconds.” Just as you wouldn’t load up your plate at the all-you-can-eat buffet, you shouldn’t buy too much on any given bad day. Do leave enough cash on the sidelines to take advantage of either better opportunities.
Just like the buffet, you should leave room for seconds, thirds, and heck, even fourths, depending on when the new, fresh food items are brought out. In the case of today’s plunging stock market, perhaps the back-and-forth tariff news will grant investors more than a handful of chances to buy dips. So, do you have a game plan for your latest TFSA contribution? Don’t be afraid of buying a stock that has a high probability of flying south tomorrow!
Shopify stock: A top-tier grower to buy on weakness
In this piece, we’ll look at a fast-growing stock that may finally be worth picking up (gradually) on weakness. Enter shares of e-commerce darling Shopify (TSX:SHOP), which tanked close to 27% from 52-week highs, primarily due to broad market weakness. Will tariffs take a bite out of Shopify’s growth in the medium term? Perhaps. But I believe that the horrid decline suggests more of a bear-case scenario will pan out.
We simply do not know which goods will be slapped with high tariffs, nor do we know if negotiations will result in something that’s more favourable. Though a “tariff-free” scenario may seem like wishful thinking, I certainly wouldn’t rule it out. Either way, leave room for buying SHOP shares on further weakness, perhaps below the $120 per-share level. Tech tends to bear the brunt of the damage in corrections. And while the bounce-back could prove just as steep, I have no idea when the tides will turn. That’s why it’s best to keep nibbling slowly on the way down.
