It can be incredibly hard to imagine putting a whole $5,000 towards TSX stocks right now. After all, the market continues to drop, trading near or at 52-week lows on the TSX today. However, it can certainly be argued that this is exactly the right time to do it.
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Uh, why?
The old adage of “buy low and sell high” does indeed hold. But that mainly works if you plan on holding long term. Warren Buffett has nailed the exact method of creating wealth, and that’s by buying valuable stocks when they’re low and selling them high after years (even decades) of having them in your portfolio.
But if everyone could do it, we’d all be like Warren Buffett, right? That’s why it can be quite difficult to identify value stocks and put them into your portfolio. Plus, we don’t all have the millions and billions at our fingertips to put towards TSX stocks and see them explode over the decades.
In fact, we may end up needing that cash sooner. This is why you want to make sure you’re choosing value stocks that you intend to hold for decades. However, should something come up, like a medical emergency, you don’t want your shares to be down. You want them decidedly up in that case. So, here is what you should look for.
Become a history nerd
If you want to know how TSX stocks will do in the future, look at their past. And if that past isn’t there with years and years and even decades of data, perhaps it’s not the right choice for you. What you want to find are companies that may dip during downturns, but come roaring back afterwards, and they’ve done this again and again.
Furthermore, you don’t want stocks that are going to be involved in any type of bubble: tech bubbles, cannabis bubbles — you name it. Again, these stocks need to stand on their own two feet. This is why investors want to look for valuable stocks in essential services.
When I say essential, that could look like power, healthcare, infrastructure, and financial institutions. Yet, of them all, there is only one area I would consider investing $5,000 in November.
Get into finance
Canadian banks have a huge history. Perhaps the largest of any other sector among TSX stocks. They’ve been around for often over 100 years. That’s a superb amount of data to look at, and data that will show these banks have made it through recessions, depressions and downturns alike.
Yet of them all, right now, I believe a great stock to consider is Canadian Imperial Bank of Commerce (TSX: CM). CIBC stock has that same history of falling during downturns only to turn right around and climb back from 52-week lows. In fact, it has hit 52-week highs within a year of hitting those lows.
Another reason to pick up the stock is that it’s been renewing its focus on customer service. While it gets hit when the housing market drops, this market will eventually stabilize. So, you could certainly get in on strong value that you can hold for decades.
Finally, it’s one of the TSX stocks with a super-high dividend yield. CIBC stock offers a 7.23% dividend yield as of writing, trading at just 9.96 times earnings. That’s immense value, while shares are down 22% in the last year. So, use that $5,000 wisely and invest in an essential stock like CIBC stock on the TSX today.
