After the volatility declines and the coronavirus pandemic is behind us, the stock market will be set for a major rally.
There’s no telling what it will do, whether it continues to climb slowly or has a second market crash. Trying to predict the short term in the stock market as well as this pandemic is next to impossible.
All we can do is start to position ourselves for the inevitable market rally that will follow this environment.
As most investors know by now, stock market environments like our current one are the best opportunities to buy TSX stocks.
After years of new stock market highs, fears of economic uncertainty in the short term have brought the price of numerous stocks down to reasonable levels.
So, investors can be satisfied buying the stocks while they are still cheap ahead of the next market rally, with the goal of holding the investments for decades.
The opportunity to get rich in a market rally
The opportunity is so strong that I believe if you buy the right stocks, you can make a fortune over the next decade.
An investor with just $10,000 today that can save an additional $5,000 a year for the next 10 years ($60,000 total) can grow that into more than $100,000 with a compounded annual return of just 10%.
Furthermore, if you continued to earn 10% and save $5,000 a year, after 20 years your portfolio would be worth more than $350,000. And after 30 years, it would be just shy of $1 million.
That’s the power of compound interest. If you start today, before the market rally, when stocks are trading at a discount, those returns can be even more rewarding.
Top stock for the market rally
One stock you can buy at a discount today and hold for those 30 years is Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM).
In the last market rally, from 2008 until early this year, Brookfield’s stock price increased by more than 500%. That means that investors who bought Brookfield at the lows in the last market crash saw a compounded average annual return of more than 16% in their investment.
Brookfield is a massive conglomerate and one of the biggest companies in Canada. The asset manager has businesses in various industries all across the world, giving it considerable diversification.
While the wide diversification keeps its business steady and reliable, some segments will inevitably still be affected by coronavirus.
Nonetheless, Brookfield continues to be resilient. Plus, it’s a company you can count on long term not just to protect your capital but grow it too.
The management team may be the best of any company on the TSX. This will be crucial going forward.
Brookfield has two main priorities in the current environment. First and foremost, it has to manage its current business operations. However, the company should also be looking for its next potential investments before the market rally.
These economic situations can put even the highest-quality companies into a vulnerable position. Brookfield is in a strong position today, as it looks for new investments.
Plus, its major capacity gives it the ability to make significant investments all over the world. So, you know Brookfield is looking for the best possible acquisitions it can make in the current environment.
This may be one of the best opportunities in the next decade to buy top stocks at discounted prices. Make sure to buy quality businesses like Brookfield. This way, you set yourself up for major gains when the economy rebounds and the market starts to rally.
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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 Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV.