Hey everyone and welcome to another weekly recap post for September 4, 2020. A big market sell-off is happening right now. Is this going to be the Black September Market Crash? Let’s talk about it.
But first, my disclaimer: this post contains affiliate links where the blog may receive a small commission on any sales from Silver Gold Bull, EQ Bank, Questrade and Tangerine.
Market Correction Finally Happens
They say September has historically been the worst month for stocks, even the big one happened in October 1929. Not to mention the big sell-offs in October 2008.
All good things must come to an end, and after a monster rally throughout the Spring and Summer, the market finally hit the ceiling and sold off massively yesterday.
The tech sector was hardest hit since it was the biggest gainer of the rally. Valuations were stretched to insane levels and even the big tech stocks were cashing in on their gains.
But is this going to lead to a broader market sell-off like we saw in March?
At this point, it’s anyone’s guess. There’s a lot of new market participants that may panic and sell out completely.
My favorite time to buy stocks is during these big sell-offs so if you’re looking to buy stocks use my Questrade link and get $50 in free trades.
Some Sectors Are Holding Up Well…So Far
Let me just say that it’s early in this correction, but what I notices yesterday and even today is that a lot of the sectors that didn’t participate in the big rally have hardly budged at all. I guess when you have energy and financials trading at bargain basement prices there’s not much room for them to move lower.
I mean you’d have to be crazy to sell energy stocks now.
The economy is slowly recovering and unemployment numbers are improving. That’s not to say that we’re in the clear, but things clearly aren’t as bad as some of the worst case scenarios suggested.
I think at this point, investors need to take the long view. I’ve been slowly increasing my energy position. I’ve added to my holdings in Suncor (SU) and Cenovus (CVE) as well as an iShares international oil index (IXC).
My bet is simply that we still need oil. And I think these positions could easily double. Do your own research before buying anything of course.
I’m making the ultimate contrarian move since most analysts hate oil and last week Exxon Mobil got kicked out of the Dow. And never mind how hated Canadian oil is right now.
So clearly there are risks, but energy has really never been any cheaper than right now. If we get massive inflation down the road then this sector could really move.
But that’s not my strategy here. I simply think that oil will recover to its already depressed levels pre-pandemic. That in my mind is an easy double.
I’m not alone in making this bet either. I saw Warren Buffett bought some more shares in Suncor last quarter, so the value is clearly there.
What’s Up With Canadian Banks?
Canada’s big banks reported last week and the numbers were pretty weak. Of course if you read the headlines they all beat expectations except Scotiabank (BNS).
But if you dig a little deeper you’ll find that the numbers were great because the trading desks made a lot of money. Every other segment was down significantly.
Personal Banking and consumer and commercial loans were gutted, down anywhere from 15%-30%.
So I think we might see some improvement in these numbers as more and more people get back to work and if we can be smarter with our collective efforts to contain outbreaks.
For now I think there’s value in the Canadian bank sector provided we’re not heading for a financial crisis.
I think consensus is that this was a kitchen sink quarter for the banks, but if the employment picture doesn’t improve then we could see more loan losses and potentially a housing crisis.
Gold is Holding Up
Physical Gold is holding up well, but mining stocks are getting slammed with the double whammy of a market sell-off and as the jobs reports beat expectations.
If these stocks break critical support levels they could be headed for a leg down. That would be, in my opinion, a good opportunity to add some exposure to the sector as all the money printing and a weak US dollar will send gold back up to its previous highs and beyond.
If we get a big drop I think I’ll add some more physical gold bullion coins too.
Save, Invest, Build Wealth and Prosper
In case you’re wondering here’s where I park my money and some financial services that I use:
For my precious metals I use Silver Gold Bull because they price match and offer fast, insured, delivery.
For my Daily banking I use Tangerine.
For my Savings I use the EQ Bank Savings Plus Account. Never heard of it? Click the link to check out my EQ Bank Savings Plus Account Review.
For investing I use a combination of TD Waterhouse (for legacy investments) and Questrade (low cost stock purchases and free ETF purchases). If you haven’t done so already, check out my Questrade Review to see why it’s the best deal around. Get $50 in Free Trades when you signup for Questrade through this link.