A market downturn can erode value from your retirement pool at a time when escalating geopolitical tensions are keeping everyone on their toes. In such uncertain times, prudent investors should steer clear of risky investments, particularly those involving credit-risk companies and certain REITs.
Understanding which stocks to avoid is essential for protecting your financial future. Here’s how to identify companies that might not weather economic storms well:
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Warning signs of a weakening stock
Early signs of trouble often manifest through management changes. For instance, Dye & Durham showed signs of weakness when shareholders held management responsible for expensive acquisitions and heavy debt. The founder and his supporters walked away from the board.
Algonquin Power & Utilities also saw the departure of the management team when debt became unbearable. Lightspeed Commerce showed a similar trend, as the founder left after several expensive acquisitions in the 2021 tech bubble. The founder has returned and is working to revive the company. Those who had put their retirement savings in these companies saw their wealth erode.
Two stocks to avoid in 2026
goeasy stock
goeasy (TSX:GSY) stock fell a whopping 70% between March 9 and 17 after the non-prime lender released a financial update ahead of the fourth-quarter earnings scheduled to be released on March 25. It is in the business of managing credit risk. Thus, it charges a higher interest rate to bear the high credit risk. The measurement of delinquency risk is the net charge-off rate, which shows the percentage of loans deemed uncollectible.
Until the third quarter of 2025, the lender boasted an annualized net charge rate of 8.9%. However, this rate has increased drastically to 12.9% for the full year 2025 and is expected to increase to mid-teens in 2026 before declining.
The company has increased its allowance for credit losses on gross consumer loans receivable by $86 million to $528 million, which is almost 10% of the receivables. These losses will eat up goeasy’s profits from net interest income as it has to pay interest to its lenders. If the lender faces a credit crunch, it may resort to dividend cuts.
All these problems appeared after the chief executive officer and chief financial officer resigned in the fourth quarter, and short seller Jehoshaphat Research warned about delinquency issues in September 2025.
goeasy stock is down due to fundamental concerns. Recovery could take a long time, suggesting investors should proceed with caution or consider alternative investments.
Timbercreek Financial
The short-term mortgage lender, Timbercreek Financial (TSX:TF), is also facing increasing credit risk. An increase in expected credit losses (ECL) from $16.1 million in 2024 to $17.9 million in 2025 affected its net income. Timbercreek reported a net loss of $1.1 million in the fourth quarter. A high credit risk loan portfolio loses its fair market value.
The market conditions are tight. Delinquency rates are increasing, and lenders are having difficulty selling collateral. At such times, keeping up with dividends becomes tough. Timbercreek Financial’s net income and distributable income have been falling since 2023 and have failed to recover. The loan yield keeps falling, and the loan volumes are not growing enough to offset the dip in net income. Add to it the rising ECL, and the dividend payout ratio increases to 96.7% of distributable income and 165.8% of earnings per share.
This signals financial stress and increases the risk of a dividend cut. Timbercreek Financial’s share price has already dipped 9.5% between February 26 and March 12. A possible dividend cut could pull the stock down another 10–30%, depending on how steep the cut is.
Shifting focus to low-risk investments
The above stocks are risky and not a buy at the dip. Investors, particularly those protecting retirement funds, should pivot to low-risk investments bearing lower debt burdens. Some low-risk stocks worth considering are RioCan REIT and Freehold Royalties.
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