Thursday’s market sell-off may have rattled investors and the market may continue to lose altitude, particularly for those, such as AI stocks, which had experienced strong rallies in the past few years.
The S&P/TSX Composite Index plunged 736 points by the closing bell amid broader market reactions to U.S. economic and political developments. While that sounds alarming, the decline amounted to just over 2%. Although uncomfortable, daily moves of this magnitude are not unusual in the stock market.
More importantly, Canada’s benchmark index is still up about 11.7% year to date, representing a gain of roughly 3,722 points. For long-term investors, one dramatic trading session shouldn’t overshadow the bigger picture.
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Market pullbacks can create buying opportunities
Should you still invest in TSX stocks after Thursday’s drop? Absolutely, provided you’re investing with a long-term perspective and buying quality businesses at reasonable valuations.
History offers a compelling reason to remain invested. Over the past decade, the S&P/TSX Composite Index has gained approximately 136%, equivalent to an annualized return of about 9%. Of course, that journey included market corrections, volatility, and periods of considerable uncertainty. Nevertheless, investors who stayed the course benefited from the market’s long-term upward trajectory.
Trying to predict the market’s next move is impossible. Rather than waiting for the perfect entry point, investors can gradually accumulate shares of fundamentally strong companies. This dollar-cost averaging approach helps reduce the risk of investing all their money immediately before another market decline.
Thursday’s pullback could also offer an opportunity to revisit stocks that have had substantial rallies. Investors who previously trimmed their artificial intelligence (AI) holdings to rebalance their portfolios might consider selectively adding exposure again, over the next months, as their outlooks become clearer. Maintaining diversification across sectors, industries, equities, and fixed-income investments remains essential.
Consider defensive infrastructure stocks
Investors concerned about volatility in AI stocks could also consider more defensive businesses. One example is Brookfield Infrastructure Partners L.P. (TSX: BIP.UN).
Although Brookfield Infrastructure benefits from the growing demand for AI-related data infrastructure, its business extends well beyond data centres. Its diversified portfolio includes utilities, transportation, and midstream infrastructure assets, generating substantial contracted and regulated cash flows.
This diversification can help provide greater stability when high-growth technology stocks experience sharp corrections. The utility stock also offers an attractive income component, with a cash distribution that has increased for approximately 18 consecutive years. Management targets annual distribution growth of 5% to 9%, giving income-oriented investors another reason to consider holding its units through market turbulence.
Its recent distribution yield is approximately 4.8%. Meanwhile, the analyst consensus price target suggests a discount of about 14% or near-term upside potential of about 16%.
Every investment has risks. Infrastructure businesses carry risks, including interest-rate sensitivity, debt obligations, and operational challenges. Even defensive stocks can decline during broader market sell-offs.
Stay invested and let compounding work for you
Thursday’s dramatic decline doesn’t erase the TSX’s double-digit gains in 2026 or undermine the case for long-term investing. Market corrections are inevitable, but they can create opportunities to accumulate quality businesses at more attractive prices.
Rather than reacting emotionally to every market swing, investors should stick to a disciplined plan: invest regularly, maintain diversification, rebalance periodically, and take advantage of pullbacks when fundamentals and valuations justify buying. Building wealth isn’t about predicting tomorrow’s market direction. It’s about owning quality investments, remaining patient, and allowing compounding to do the heavy lifting over time.
