The TSX Index Had an Insane 100-Day Growth

The March crash was undoubtedly the worst plunge of the decade, but the recovery was even swifter than many of the past crashes.

On March 23, the TSX saw one of the worst falls since the great recession in 2009. The index fell over 37.4% from its pre-pandemic peak, and reach its worst valuation on March 23. But the fall isn’t the only historic event for the index in this historic year. What followed was one of the swiftest recoveries in decades.

First Thursday of the month market the 100th trading day since the fall in March. In those hundred days, TSX climbed a whopping 47.65%. Though the 5,350 point growth in 100 days isn’t wholly unprecedented, we might have to go back quite far to find another example. In fact, it might be the swiftest 100-day growth ever since the last depression in the 1930s.

A sharp rise and fall

Both the fall and the subsequent recovery following the March crash have been rapid. Investors who were smart enough to buy stocks when the market hit its worst valuation would have profited greatly from this rapid recovery, even if it is propped up on false optimism.

But how long is this going to last? Will the 200-day recovery keep following the same pattern that the 100-day growth established, or would TSX halt or even fall in the near future?

If the current growth phase of the stock market is simply a bounce-back recovery, and the market hasn’t actually “corrected” to align with the actual economic condition, then right now might not be a perfect time to buy. That’s especially true if you are considering stocks that have fully recovered. If another crash is on the horizon, you should wait and buy then.

What to buy now?

If you believe that a market crash isn’t coming or isn’t coming anytime soon, then your stock choice should be a bit different. One stock that is still trading at a discount is Genworth MIC (TSX:MIC). The $3.14 billion company is the largest private mortgage insurers in the country. It has $6.6 billion worth of assets under management.

One of the main reasons to buy this stock is that it still hasn’t recovered from the March crash. While the company has managed to increase its share price by almost 50% since its lowest valuation, it’s still 40% down from its pre-pandemic high. Before the pandemic, Genworth MIC was a decent growth stock. It grew its market value over 100% in the past five years before the crash.

Another reason to buy into this company is its dividend history. As an aristocrat, it has been increasing its dividends for over a decade. Because of its current valuation, the yield is now a mouthwatering 5.94%.

Foolish takeaway

It’s hard to predict how the market would behave in the next few months. Most experts and indicators point to an inflated market recovery. There is a lot of money in the market right now, but not because the economy has properly recovered, but because the government has intervened.

And when the government’s generosity has run its course, which it eventually will, the market might see a brutal correction.

Fool contributor Adam Othman has no position in any of the stocks mentioned.

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