How to Keep Investing Wisely When the TSX Keeps Climbing

Invest in TSX stocks that are more predictable and carry lower downside, and consider holding more cash.

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Key Points
  • The TSX has rallied 73% over five years and 152% over 10 years, making it harder to find value, but history shows timing the market is difficult and continuing to invest remains the best approach.
  • Warren Buffett quietly sold equities from 2022-2025, leaving Berkshire Hathaway with $397 billion in cash (over half its portfolio value), positioning for opportunities when the market corrects.
  • Investors can maximize returns at market highs by increasing cash positions, investing in undervalued stocks like Cineplex (down 26% over five years despite recent recovery momentum), or buying lower-volatility stocks like Fortis with its 52-year dividend growth streak and 3.2% yield.

In the last five years, the TSX has rallied 73%. In the last 10 years, the TSX has rallied an even greater 152%. Clearly, the TSX is on a roll and as it keeps climbing, it becomes harder to find value in stocks. Yet, history shows that timing the market is very difficult, and the best thing to do is to keep investing.

This being said, here are a few things for investors to consider in order to maximize returns.

man is enthralled with a movie in a theater

Source: Getty Images

Increase your cash balance

Warren Buffett has famously increased his cash weighting at times when he believed that markets are overvalued. At the end of 2025, Warren Buffett stepped down as CEO of Berkshire Hathaway. He left with $373 billion in cash on its balance sheet, as he quietly sold equities throughout 2022 to 2025. Currently, Berkshire is holding $397 billion in cash. This represents more than half of the portfolio’s total value.

“Be fearful when others are greedy, and be greedy when others are fearful”. Berkshire Hathaway is living this quote today, taking a bold position that will undoubtedly cause friction amongst Berkshire’s shareholders given how strong the market has performed. Yet, the company is well positioned to enter the market at more favourable valuations. They may fall, thus increasing long-term returns.

Invest in undervalued TSX stocks

Here in Canada, the TSX is also trading near all-time highs, and the same psychology exists in the market. Investors are very optimistic, and stock prices keep rising.

Investing in undervalued stocks can limit your downside if and when the market corrects. Stocks that are clearly undervalued but that you believe have been misunderstood or are recovering from temporary company or industry challenges. TSX stocks like Cineplex Inc. (TSX: CGX). Cineplex stock has made it through the pandemic. It has made it through the threat that streaming companies pose. And it has made it through the resulting financial hit. Yet, Cineplex stock is down 26% versus five years ago and 77% versus ten years ago. This is a far cry from the performance of the TSX.

For Cineplex, the upside is clear. And while nothing is guaranteed, the company’s latest results are encouraging, as Cineplex’s first quarter posted strengthening attendance. Furthermore, Cineplex’s May box office revenue of $60.5 million was the highest since 2019, and 9.4% higher than last year. Year-to-date box office revenue is currently $120.5 million, which is 12.9% higher than the same period last year.

Invest is lower volatility TSX stocks

Lower volatility stocks are usually stocks that are in a highly predictable, economically insensitive industry such as the utility sector. TSX stocks like Fortis Inc. (TSX: FTS). Fortis’ utility business has been powering our homes and workplaces for decades. And Fortis stock has been providing solid returns for its shareholders for decades, including 52 years of annual dividend increases.

Today, Fortis stock is yielding a respectable 3.2%, but more importantly, it holds lower downside risk both financially and with respect to its share price – a wise investment as the TSX continues to climb.

The bottom line

With the TSX trading near all-time highs, it’s wise to adjust our strategies and proceed with caution. This can protect investors from downside risk while also ensuring participation in the market.

Fool contributor Karen Thomas has positions in Cineplex. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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