Beginning investors seeking to build real wealth over the long haul should seek to put new money into markets gradually over time rather than “time” markets. Indeed, it’s far easier to invest systematically by putting a small slice of your paycheque in a TSX stock you deem as undervalued instead of trying to time market lows and highs.
Indeed, many new investors want to make a quick buck in markets. And though it’s certainly possible to make quick money off soaring momentum stocks over the near term, I think that those who seek to build real wealth over the long haul shouldn’t pay too much emphasis on the day-to-day action.
There will be a lot of stuff happening on any day or week. And there’s sure to be a slew of risks and worrisome headlines that could prevent you from investing your latest sum. Undoubtedly, investing after a rally when many big names on Wall and Bay Street are hesitating over the possibility of a correction or many years’ worth of below-average stock market gains.
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Nobody knows where stocks head from here. It’s important to stick with a long-term plan
However, the truth is that nobody knows what the S&P 500 or TSX Index will have in store for us over the next 10, 20, or even 30 years. Could the road ahead be bumpier and less rewarding than in the past?
That’s certainly a possibility. However, for stock pickers, I think that insisting on value stocks rather than higher-multiple growth stocks could help you score decent results over time. And at this end of the day, it’s about landing a satisfactory return for your investment over a long period rather than trying to score a big gain overnight in the hottest stock the internet may be buzzing about.
If you’re a market newbie and you’re timing the market (either by waiting in cash for a market crash or taking on a risk-on portfolio with the hottest momentum plays in the market), odds are you’ll underperform relative to a good, old-fashioned buy-and-hold index fund approach. Indeed, sometimes simplicity yields the best results!
In this piece, we’ll look at one of the better stocks that I guess you could consider incredibly boring but solid. It’s the company’s boring nature that makes them intriguing long-term value options that could slowly outperform as the rest of the market chases the euphoric artificial intelligence names that continue to beckon new investors from left, right, and centre.
Intact Financial: An underrated performer on the TSX
Consider shares of Intact Financial (TSX: IFC), a Canadian property and casualty insurer that I believe is one of the TSX Index’s most underrated names. At writing, the stock is up more than 28% in the past year, as the firm clocked in solid quarterly results steadily over time.
Even with catastrophe loss events that hit in the third quarter (Q3), I view Intact’s long-term story as very much in play. The company recently noted its total catastrophe losses for Q3 will be in the ballpark of $1.2 billion pre-tax.
As one of the best risk managers in the game, though, I wouldn’t throw in the towel on the stock right here, especially at 23.15 times trailing price to earnings (P/E) — a multiple that’s way too cheap for the calibre of insurer you’re getting.
It’s not just the modest valuation that has me enticed by the name but the low beta (0.58 at writing), which entails a lower degree of correlation to the rest of the market. So, if you’re looking to reduce your market risk without cutting into your returns, Intact is a smart option to check out.
