Warren Buffett is a name that’s become synonymous with great investment ideas. It’s clear why. The billionaire finance guru came from nothing and is now arguably one of the best investors of the last century. Yet when it comes to some of his investment ideas, they can be quite simple.
Today, I’m going to give you the top mistakes to avoid, especially as Canadians continue to trade in a volatile market. Let’s get right to it.
Buffett: Avoid these dumb mistakes
When it comes to investing, it really comes down to humans being way too human. We go with our gut. We make emotional decisions. Ultimately, we stay away from data, wondering if we’re in the wrong and everyone else is in the right.
Yet Warren Buffett, again and again, states to avoid these types of mistakes. First, he states often that investors need to push fear and greed aside to make smart investment choices. Don’t be fearful that your stock might fall if you’ve done the research and worked with an advisor. Trust your research and hold long term.
But it goes further than that as well. Investors might see a pessimistic market and sell or an optimistic one and buy. Instead, stick to the data that will help you identify opportunities. Speaking of opportunities, though, there is also the fear of missing out (FOMO) in the investment world. We all know the one person who purchased a top growth stock at $1. But there’s a reason these stick out; it’s because it’s pure luck and chance — unless you have insider information.
Finally, don’t fall for the trap of panic and euphoria. You see shares dropping and sell in a panic, worried it will drop further and you’ll miss the opportunity to get out. Yet there’s just as importantly the chance to buy in a euphoric position, with shares at all-time highs leading to more purchases instead of waiting on a dip.
Instead, stick to the data. These are companies, not humans, and should be treated as such. This is why now we’re going to look at a company that investors can look into further.
Bank on it
Perhaps one of the best opportunities during a downfall is through Canadian banking institutions. There hasn’t been a banking crisis since 1840, providing investors with a strong option to get in when shares drop and all but guarantee a recovery.
That’s the case with Canadian Imperial Bank of Commerce (TSX:CM) right now. CM stock has been around for decades, going through multiple recessions and coming out strong on the other side. This comes from provisions for loan losses, of which it continues to use even now.
Granted, it’s been a difficult few years with a volatile market on top of a pandemic. Even so, the bank will persevere, as it has recession after recession. And right now, CM stock is a steal, trading down 8% in the last year but still up 50% in the last decade.
Plus, CM stock offers a solid dividend yield of 6.14%, one of the highest of the banks right now. Finally, it trades at just 11.11 times earnings, which is lower than its peers at this point as well. While the stock may take longer to rebound than the other banks with its exposure to housing, it still has a long-term growth path ahead of it for investors to consider.
Bottom line
So, don’t be fearful of the financial institutions trading down; instead, get in on the action. These are great deals that offer superior dividends for investors these days. Buy now, and you could have a portfolio that even Warren Buffett would drool over.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
