Investment

The Stock Market Is Surging. Should You Invest Now or Wait?

Published

11 months ago

December 16, 2023

After a tumultuous couple of years, the stock market has been surging recently. So far this year, the Dow Jones Industrial Average (^DJI 0.15%) is up by around 12%, the S&P 500 (^GSPC -0.01%) has risen by nearly 23%, and the Nasdaq (^IXIC 0.35%) has soared by a whopping 41%.

While many investors are excited about the possibility of a new bull market, others are worried that this is only a temporary rally and that prices will fall again.

It can be tough, then, to decide whether to invest now or wait. If prices are on their way up, now could be a fantastic time to buy. But if you invest now and the market dips, your portfolio might immediately lose value. The good news, though, is that your timing may not matter as much as you think.

Image source: Getty Images.

Is it safe to invest right now?

It can be tempting to wait until the perfect time to invest in the stock market. After all, if you invest when prices are at their lowest and then sell when they peak, you could potentially make a hefty profit.

However, even the experts can’t predict what the market will do in the short term. Case in point: For most of this year, economists have been predicting everything from a stock market crash to a 2008-level recession. Few would have imagined that major market indexes would be reaching new highs by the end of the year.

If you’re waiting for the best time to buy, then, you may end up waiting forever — and missing out on precious time to build wealth in the meantime.

A better option, then, is to simply invest consistently no matter what the market is doing. This strategy is called dollar-cost averaging, and it involves buying at regular intervals throughout the year. Sometimes you’ll invest when prices are at their peaks, and other times you’ll buy at a discount. Over time, those highs and lows should average out.

What if stock prices fall again?

It’s nerve-wracking to invest in times like these, especially if the market ends up taking a turn for the worse. But if you’re able to keep a long-term outlook, it can make investing a little easier regardless of what happens.

The market will always be volatile in the short term. But over decades, it has consistently earned positive total returns despite volatility. Over the past two decades alone, for instance, the market has faced the dot-com bubble burst, the Great Recession, the COVID-19 crash, and the current slump. Yet the S&P 500 is still up by nearly 221% since 2000.

^SPX data by YCharts

Even if you invest at a “bad” time, you could still earn more over the long haul than if you were to wait for a better time to buy.

For example, say you had invested in an S&P 500 index fund in February 2009. This was immediately before the index bottomed out amid the Great Recession, and it may have seemed like the worst possible time to invest. But by the end of the year, you’d still have earned returns of more than 35%.

^SPX data by YCharts

On the other hand, say you had waited until September of that year to buy. The market was already surging by then, and it may have seemed like a safer time to invest. However, you’d have only earned returns of around 12% by the end of the year.

In other words, it’s often better to invest now and ride out any potential storms than to wait. The market could still fall again in the coming weeks or months. But over several years, it’s extremely likely to rebound. By investing now, you’re more likely to earn more over time — regardless of what happens in the near term.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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