Canadian investors shouldn’t speculate on the hot stock of the day with the hope that they’ll be sitting on a massive gain next week, next month, or even next year. Indeed, by chasing momentum and neglecting the valuation process, you could be setting yourself up for short-term pain with none of the long-term gains.
Indeed, trading stocks can make you big bucks in a hurry, but it can also cause you to lose your shirt in record time. And unless you’ve been in the trading game for many years, the odds will probably be stacked against you.
Instead of trying to maximize gains in a near-term timespan, consider broadening your horizons. If you’re young and can invest for the next three to five (or even +10 years), you can put the odds right back in your favour. And you don’t need a master’s degree in finance or anything of the like.
Be ready to pounce on the deals as they come!
Take the 2020 stock market meltdown as an example. It happened so fast, and if you invested through it, it was scary. Nobody knew if the new coronavirus would cause a forever lockdown or something worse. That said, if you stayed contrarian and valued businesses with the long-term horizon in mind, it was easier to act. But if you hesitated for just a moment, you probably missed the sharp melt-up that followed. Indeed, such V-shaped bounces don’t happen often.
Perhaps once every several years or so. But the important thing to remember is that they will happen in due time, and you must be prepared, with cash on hand, ready to buy stocks at huge discounts to their worth. With tech still feeling the scars of the recent summer selloff, perhaps now’s a great time to get a high-tech grower at a discount.
In this piece, we’ll look at a “riskier” stock that I believe could make great long-term bets. Indeed, volatility itself isn’t equal to risk if you’re in it for the long haul. By riding out the big waves, you may be able to help your portfolio grow at an astounding rate.
Shopify stock: High growth that could be worth the risk!
Take shares of Shopify (TSX:SHOP) as an example of a choppy ride that will likely be worth your while if you’re playing the long game. Shares have a sky-high 2.36 beta, meaning far more market risk than other names. And with no shortage of bear market plunges, shares have scared out many of the weak hands who are just in it for a shot at making a quick buck.
Recently, the company was given praise by an analyst who highlighted that the firm is well-equipped to benefit from the rise of “social e-commerce.” Indeed, social commerce hasn’t taken off like it has in China. However, given social media’s profound impact on consumer behaviour, I would not be shocked if the U.S. and Canada experienced major growth in social commerce in the next decade.
Redburn analyst Dominic Ball sees a 42% compound annual growth rate (CAGR) in the American U.S. social commerce market between 2023 and 2027. That’s a huge opportunity, and Shopify arguably has a front-row seat with its impressive innovative capabilities.
