Mar 21, 2025
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The economic uncertainty caused by President Trump's repeated threats of across-the-board tariffs on Canadian imports, alongside our nation's retaliatory response, has been negatively impacting the Toronto Stock Exchange (TSX).
Per recent Morningstar reporting, on March 4, the S&P/TSX Composite Index with a net loss of 429 points. A potential trade war with the US has raised the alarm for a potential recession in Canada, which is dealing with a less-than-stellar economy, a spike in joblessness and weak business sentiment.
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While stock market volatility may make stashing your cash in a shoebox under your bed seem like the safest bet to sidestep any big investment losses, an investor would only have to look back at the big market crash of 2008 and the subsequent recession to know that while things may get tough, the markets inevitably self-correct and things will get better — but it will take some time.
Here are three things to keep in mind as you watch stocks fall.
1. The market is resilient
When investment professionals like Dan Tersigni, director of digital advice at Wealthsimple, get calls from clients when markets are tanking, they know what the question is going to be even before the customer asks.
Tersigni recounts a common concern shared by a broad swath of clients: "'It doesn't look like the news is going to get any better. Shouldn't I just get out now, cut my losses, and then get back in when things start rebounding?'"
And here's what he tells them: Stay the course with your investing, because over time "the odds are overwhelmingly in your favour."
No matter how awful things may look on a particular day or during a particular week, stocks generally make back their losses and then some.
But you have to be willing to be patient. Tersigni points out that it took markets four to five years to recover from major downturns in 2001 and 2008.
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2. You have goals
Are you investing for the long haul, working toward a big goal down the road — maybe a comfortable retirement? The worst thing is to go off track by ditching investments when stocks take a dive.
"For most of us, not much has changed just because the market has gone down recently, you're saving for retirement, you have a 20-year horizon," says Tersigni. "You still have time on your side, and you really don't want to be making short-term decisions."
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And if you are close to retirement, the thing to remember is that it's a decades-long journey, not a one-time thing. So you, too, have time to make back losses.
If volatility in your accounts keeps you up at night, maybe you need to reevaluate your investment mix. Your money should be diversified, to help you weather the market storms — even the hurricanes.
At those times, the best approach is to restrain yourself from peeking at your battered balances and keep your hands off your portfolio.
3. Market downturns can be good times to buy
Normally when the stock market takes a pounding, you shouldn't focus on what you're losing, but instead on what you could be buying. A market plunge or "correction" makes stocks cheaper.
But the uncertainty surrounding a potential trade war has made it riskier to follow the usual advice to "buy on the dips." You could lose money if you mistakenly bet that a stock has hit bottom.
"It's going to be really hard to do. Your odds of getting it right are low," says Ben Reeves, Wealthsimple's chief investment officer.
A better approach is to maintain steady, automatic withdrawals from your bank account into a well-diversified portfolio, maybe one held at an automated investing service that uses technology to keep making adjustments in your investments. That way, you'll get the best performance from your money — even during the worst of times.
Sources
1. Morningstar: Stocks Hit by Tit-for-Tat Tariffs, by Vikram Barhart (Mar 4, 2025)
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Doug Whiteman was formerly the editor-in-chief of Money.ca. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show First Business.
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