The Motley Fool

Market Crash Prep Class: Should You Sell Your Stocks Now?

Image source: Getty Images

The biggest mistake many investors have made recently is selling out of good high-quality positions. Many investors did so during the volatility we witnessed in the first quarter. Many of the best quality companies have rebounded to pre-COVID-19 levels. Further, these companies have hit new all-time highs. Market sentiment is a fickle thing, as is timing the market.

Case in point

One stock I have liked throughout this volatility is Cargojet (TSX:CJT). This Canadian purveyor of air freight solutions has skyrocketed to new all-time highs of late as e-commerce business has exploded post pandemic. With everyone forced to shop at home, Cargojet’s core business is booming.

Cargojet is a rare company in that it has an effective monopoly (around 90% market share) of air cargo shipments in Canada. The company’s agreement with Amazon.com Inc. has been extended. Many analysts believe this company will continue to maintain this relationship moving forward.

The Canadian market is a notoriously highly regulated space. Barriers to entry make Cargojet’s offering even more lucrative. Threats to entry from large players like Amazon do exist. However, I anticipate the next five to 10 years, at least, to be smooth sailing for Cargojet.

The pandemic has also created an advantageous market for leasing planes, given the number of aircraft currently sitting idle. This allows for relatively inexpensive ramp-up of operations, as needed, to meet the demand increase from Cargojet’s customers.

As a service company, Cargojet offers excellent exposure to the e-commerce boom without the stress and risk associated with running a consumer-facing business. This is perhaps one of the best stocks to stay invested in long-term, despite market turmoil that may arise in the future.

The 10 Best Stocks to Buy This Month

Click here to learn more!

Bottom line

Those who sold positions in Cargojet in March are among a large group of investors who paid the price to be rid of risk. Volatility represents the risk investors take when owning stocks. Stock market gains are not linear — a difficult concept for many to grasp.

This pandemic has taught us that staying strong and holding on to high-quality enterprises like Cargojet is the most profitable way to invest for the long term. Constantly buying and selling stocks eats away at long-term returns through trading fees. This also forces many investors to miss up the periods of market gains which are so valuable over the long haul.

The 10 Best Stocks to Buy This Month

Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.

Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.

Click Here to Learn More Today!

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CARGOJET INC.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.