It’s been a rather volatile start to the month of March, with the Iran conflict and continued pain working its way through the cooling tech trade. With the massive spike (and ensuing plunge) in oil prices as well as a mounting list of uncertainties to be concerned with, it’s becoming harder to put new money into the markets, especially now that momentum is starting to wane.
Undoubtedly, stocks might be getting pricier, but that’s no reason to wait around with a mountain of cash, waiting for some sort of correction that might not happen at a time that’s convenient for you.
Sure, a correction would not be out of the ordinary if it were to happen in March. But if we’re not getting one and the rally picks up where it left off going into the second quarter, perhaps overweighting cash and steering clear of stocks could be a regrettable move.
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March is a tough time to put new money to work. But it’s worth investing anyway!
Either way, investors should consider the risks on both sides of the coin. For younger investors with minimal stock exposure and consistent, steady paycheques, I’d argue that buying gradually can make sense to ride out the volatility waves.
While investing a lump sum instead of dollar-cost averaging (DCA) might be the smart move, given stocks tend to rise more than they fall, I’m certainly not against incremental buying if it gives investors peace of mind, especially for those who would have otherwise stockpiled cash, waiting for a crash.
Regardless of what kind of bearish forecast or commentary you heard recently from some “smart” individuals, sometimes it’s best to buy and hold rather than wait to buy, regardless of the circumstances.
Barrick Mining
If you’re not meaningfully exposed to the materials sector or you lack a gold hedge, I think Barrick Mining (TSX: ABX) could be a sound bet here. Shares have more than doubled in the past year, rising close to 140% over the timeframe. Undoubtedly, the smoking-hot stock might be too hot to handle, but unless you think the price of gold is going to implode well below US$4,000 per ounce, I find the miners, especially Barrick Mining, to be incredibly undervalued.
Even after a hot run, I don’t view Barrick as running out of gas, especially when you consider its relative discount to peers. The stock goes for 15.7 times trailing price-to-earnings (P/E), which strikes me as too cheap. Of course, the miners have tremendous operating leverage, which can work both ways. As such, prepare for volatility with the name and be ready to add to a position when the time comes if you’re a fan of ABX stock.
While parabolic moves in gold could precede a sharp dip, I do think the macro picture and “debasement” trade could support gold for some time. And if it does, miners like Barrick will be enjoying record cash flows, which they can use to line the pockets of shareholders. In short, miners are a choppier, but productive way to bet on gold.
