The Motley Fool

The #1 Mistake to Avoid During a Market Crash

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A market crash is inevitable, and investors are prone to commit mistakes when it happens. When there is a fear of losing money, the tendency is to push the panic button.

One of the classic mistakes is to sell low to protect your investment profits, which is all the more reason you shouldn’t be selling low if you bought the shares at higher prices.

Before unloading your stocksaaaaaaaaaaaaa, assess the actual situation. It might be a mere market correction or normal market turbulence and not a market crash. However, there’s less monitoring if your portfolio includes Toronto Dominion Bank (TSX:TD)(NYSE:TD) and Suncor (TSX:SU)(NYSE:SU).

High-quality bank stock

TD is one of the formidable banking institutions in the world. The bank went through the severest financial crisis and was able to endure all of them. During the 2008 financial crisis, TD was the only bank to report revenue and earnings growth. It was the feat that endears the bank to thousands of income investors.

So far this year, TD is exhibiting steady performance despite the slowing economic growth and trade war. The stock is up 11.58% year to date with the potential to climb by 13.88% in the next 12 months, according to market analysts. With a dividend of 4%, your return on investment could be more than what you expect.

Keep in mind that the bank has been paying dividends since 1857. TD is also part of the Canadian banking system, which is considered the most stable and mature banking systems in the world. You don’t have to sell the stock in a market crash.

Buy but don’t panic sell

You’re not gambling or taking too much risk by investing in Suncor. Many income investors pass up on the less risky mutual funds in favour of this energy stock. In the latter part of April, the price soared to nearly $46 but is trading at $39.36 or 14.3% lower.

Investors familiar with Suncor, however, aren’t in panic mode. Even legendary investor Warren Buffett sold his shares of Suncor in 2016, only to admit two years later that he made the wrong decision. Buffet rebought Suncor shares in 2018 and it’s now his top energy stock.

According to analysts covering the stock, Suncor could regain momentum in the coming months. They are forecasting a price appreciation of as much as 52.4%. You can sell Suncor on the dip if you fear a market crash. However, you’d be missing out on the stock’s growth potential.

This $61.3 billion energy giant won’t be affected by the election fervour. Regardless of who wins, Suncor will embark on its plans and take on significant projects for further growth. The company is also working to reduce its greenhouse gas emissions for the good of the environment.

Bigger profits over time

There’s no sense in abandoning your position if you own “buy and hold” stocks. TD and Suncor are not risky investments. You don’t have to fixate on the price movements since both stocks are for a long-term hold. The longer you keep TD and Suncor in your portfolio, the bigger your profits would be over time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned.

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