If you’re a bit uneasy over the recent November choppiness that’s hit the TSX Index and S&P 500, you’re definitely not alone. And while there are fears over swelling valuations, especially in some corners of tech, I’m inclined to think that any tougher sledding could make for a chance to put a bit of new money to work, rather than a sign that we’ve reached some sort of peak before a bubble goes bust.
At the end of the day, many pundits view the rise of AI as revolutionary, and while the most recent comparable may be the internet boom of the 1990s, I’d argue that there really isn’t anything that’s quite like the latest AI surge. Undoubtedly, even if AI lives up to the hype, there’s really no telling how stocks will react on the road higher.
Frenzies can happen, and if they can be corrected sooner rather than later, the better it is for new investors who are just getting started with their careers, seeking to put a bit of every paycheque into the broad financial markets. It’s market booms and melt-ups that go unchecked (with no corrections) that I think are the most dangerous.
Nervous about tech volatility? Don’t panic! Consider shifting gears back to value
So, as some investors get a bit nervous as market momentum runs out of gas, I think it’s time to not only stay on the path forward, but perhaps seize the opportunities as they come around.
Of course, the broad TSX Index and S&P 500 are off around 2% from their highs after a turbulent week of trade and jitters as the U.S. Federal Reserve hints at a lower probability of a rate cut for next month (it was well above 50% before, but now the odds might be a coin toss at best). In any case, a 25 basis point (bps) cut isn’t all too big a deal, especially if the Fed is holding off because of a lack of data due to the government shutdown south of the border.
In the grander scheme of things, a few missing data points and a missed cut mean less than the long-term AI-driven story. However, for now, don’t be shocked if AI stocks navigate rougher waters going into 2026. While it’s too soon to tell, I do think that a great rotation back into the boring names could be in the cards. Can trimming a bit off your growth darlings be a bad idea by the year’s close to make good on some tax-loss selling?
Most definitely not, provided you’re able to get in before the next leg higher, whenever that may be. Either way, short-term pain might be necessary for long-term gain.
Manulife stock might be a stellar buy on a breakout
And for those who don’t want to be on the receiving end at a time of hefty valuations, I’d look into value plays such as Manulife Financial (TSX:MFC), which also has a good amount of momentum riding behind it. Shares of the fantastic insurer have gained more than 85% in two years. With a promising, growthy Asian segment and some considerable tailwinds, I’d not be afraid to buy as the stock breaks out again.
Shares still look quite cheap at 15.5 times trailing price-to-earnings (P/E). And with a nice 3.6% dividend yield and a tad less correlation to the broad markets (0.87 beta), shares look too good to pass up for investors who seek growth opportunities at a reasonable price and a bit more insulation if tech is in for a period of underperformance after many years’ worth of relative outperformance. In short, don’t sleep on the non-tech value plays, as they might continue to surprise.
