Although the last few years have consisted of heightened uncertainty for investors, from surging inflation to rapidly rising interest rates, there’s no question that with the consistent threat of tariffs impacting global supply chains, uncertainty hasn’t been this high since the start of the pandemic.
Between ongoing geopolitical tensions, inflation that remains above target, and central banks that are hesitant to commit to rate cuts, market sentiment is already fragile. Add the renewed threat of tariffs and potential trade wars, and it’s no surprise that volatility is on the rise.
Tariffs have a direct and immediate impact on the market, which is why the market has seen so much volatility in recent weeks.
However, just because tariffs and short-term uncertainty can shake up the market doesn’t mean you should abandon your strategy. In fact, it’s the exact reason why long-term investing remains the best approach.
Markets are emotional in the short term. They react to headlines, policy announcements, and macro data in real time. But over the long haul, they follow earnings, business fundamentals, and economic growth.
That’s why staying focused on owning high-quality companies and tuning out the noise is so important. Tariffs might impact the earnings of stocks for a quarter or two, or even longer if a full-scale trade war erupts, but they won’t derail solid businesses with long-term tailwinds.
Therefore, the biggest risk for retail investors isn’t temporary market swings; it’s getting caught up in the panic and selling at the wrong time.
So, while volatility may be uncomfortable, it’s part of the process. And if you’ve got a long time horizon, it’s something you can use to your advantage.
Short-term pullbacks are often some of the only times that high-quality stocks go on sale. It’s the opportunity long-term investors can wait years for. That’s why keeping a long-term mindset and taking advantage of these opportunities is so important. That’s where long-term wealth is built.
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Long-term investing is essential to navigate the current economic landscape
Even if tariffs cause short-term inflation to rise again and force central banks to pause or even reconsider rate cuts, that doesn’t mean long-term investors should change course.
If anything, it’s another reason to ensure that the stocks you’re buying are some of the highest-quality companies in Canada.
For example, companies in the utility sector, like Fortis, have regulated revenues that aren’t as exposed to short-term economic fluctuations. And while a trade war might hurt some Canadian stocks in the near term, domestically focused companies like grocery chains or telecom stocks may be better insulated.
In the same way, stocks with strong dividend histories often provide a buffer during times of uncertainty. These companies are typically profitable, cash flow positive, and committed to returning capital to shareholders regardless of market conditions. So, even if their share prices drop temporarily, you’re still being paid to wait.
One of the best Canadian stocks to buy now as tariff threats continue
Although a stock like Fortis can be a great investment to rely on in this environment due to both its defensive nature and the consistent dividends it pays, if you’re really looking to take advantage of the heightened volatility, one of the best stocks to buy now is Canadian Apartment Properties REIT (TSX:CAR.UN).
As the largest residential real estate investment trust (REIT) in Canada, CAPREIT is another highly reliable stock similar to Fortis. The main difference between the two, though, and what makes CAPREIT one of the best stocks to buy while tariff threats keep volatility heightened, is that CAPREIT is trading significantly undervalued.
With the REIT trading below $40 per unit, its forward price-to-funds-from-operations (P/FFO) ratio is currently just 15.4 times. That’s well below its five-year average forward P/FFO ratio of 20.1 times.
Furthermore, the REIT currently offers a yield of roughly 3.9%, which is well above its five-year average forward yield of just 3%.
So, although the constant threat of tariffs and heightened market volatility can be unsettling, investors who can ignore the noise and stay focused on the long haul have a significant opportunity.
It’s these short-term environments that give long-term investors some of the best opportunities to buy high-quality stocks at a discount and set themselves up for years of gains.
