How to Keep Investing Wisely When the TSX Keeps Climbing

Here are two TSX stocks to consider adding to your self-directed portfolio if you’re wondering where to invest in a bull market.

Key Points
  • The S&P/TSX Composite is up about 33.34% year‑over‑year and trading near record highs, making deep discounts harder to find.
  • Two long‑term plays: Toronto‑Dominion Bank (TSX:TD) — ~$273.4B market cap, 169 years of dividend distributions and a value pick among Canada’s Big Six banks; Fairfax Financial (TSX:FFH) — ~$49.7B market cap, trading near $2,283 with a trailing P/E ≈8.1 and ~15% below its 52‑week high.
  • Foolish takeaway: prioritize high‑quality, resilient businesses with strong fundamentals (like TD and Fairfax) and focus on long‑term investing rather than timing short‑term market moves.

As of this writing, the S&P/TSX Composite Index is up by 33.3% from the same point 12 months ago. The benchmark index for the Canadian stock market is hovering around yet another record for all-time highs, despite trade tensions and geopolitical factors impacting markets and economies worldwide.

Plenty of Canadian stocks have enjoyed a significant surge, displaying resilience that can inspire confidence in some investors and raise concerns about a downturn in others. On one hand, there’s excitement about the rally. On the other hand, buying right before a pullback can end up in significant losses.

With the market at an all-time high, it can be tough to identify stocks offering deep discounts that can deliver outsized gains. However, investors with a long investment horizon should not focus on short-term market movements. The real key to success is investing with a long-term view.

I advise that you should keep looking for high-quality stocks, instead of focusing on possible investments that can deliver short-term profits. Today, I will discuss two long-term plays to consider for your self-directed portfolio regardless of the ongoing rally.

chart reflected in eyeglass lenses

Source: Getty Images

Toronto-Dominion Bank

Toronto-Dominion Bank (TSX: TD) is one of the Big Six Canadian Bank stocks and a staple for many investment portfolios. The $273.4 billion market cap stock is one of the oldest financial institutions belonging to a historically resilient banking sector in Canada. While you can never go wrong with investing in the Big Six, TD Bank stands out as a value investment among its closest peers.

TD Bank has been paying investors their dividends since 1857. This means the bank has distributed quarterly dividends for 169 years without fail through several economic crises, two World Wars, and other historical events, showing excellent resilience. Its leading position in the industry, reliable track record, and ability to continue growing make it a compelling investment in any market environment.

Fairfax Financial Holdings

Fairfax Financial Holdings Ltd. (TSX: FFH) is a $49.7 billion market cap holding company that provides property and casualty insurance, reinsurance, and investment management through various business segments. It is also a stock that carries a significantly high share price. As of this writing, it trades for $2,283.18 per share. While that might seem like a high share price, it seems like a bargain. Trading at an 8.1 trailing Price-to-Earnings ratio, it is arguably cheap.

Down by 15.4% from its 52-week high, it is lagging behind the broader market right now. The stock has industry tailwinds that paint a favourable picture. The firm, led by Prem Watsa, seems like an attractive value buy for investors seeking a sound asset to buy and hold in their self-directed investment portfolios.

Foolish takeaway

The smartest approach to investing during a rising market is to simply use the same strategy that works in every environment. Focus on quality businesses with solid fundamentals, healthy growth trends, and the potential to continue delivering returns for the long run.

Companies like TD Bank and Fairfax Financial Holdings have the kind of resilient operations and management that can weather market volatility to emerge stronger on the other side. Despite downturns due to short-term factors, the underlying businesses have what it takes to provide growth to disciplined investors who remain invested.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool has a disclosure policy.

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