Thousands of investors found the following articles useful last week; you might, too! In these articles, I talked about what I learned from the financial crisis of 2008 and how it applies to the current market downturn, tips for new investors, and what not to do in a falling market.
Top Article: What I Learned From the Financial Crisis of 2008
Investors who experienced the financial crisis of 2008 would remember the scary experience. For example, the Big Five Canadian banks fell 50% from the 2008 highs to the 2009 lows.
I bought shares of Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) after it fell about 24% from its 2008 high. Yet, it went on to fall another 30%. To learn how I reacted, what lessons I learned, and how I applied the experience to the current market downturn, read more at What I Learned From the Financial Crisis of 2008.
Top Article #2: Tips for Smart Investing
Investing is not exactly easy, but it doesn’t have to be complex either. New investors can start by buying only quality, dividend stocks when the market is down. That way, you’re not paying too much for companies; lower prices also gets you a higher income to start. How?
Just in October, Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) cost as much as $102 per share and yielded only 4.4%. Today, after the pullback, it only costs under $88 per share and yields almost 5.3%. Immediate income boost!
The Big Five Canadian banks are cheap today. They can become cheaper in this market downturn, but three, in particular, look especially attractive at these prices, including Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) that yields 5.3%.
Along with the market decline, the Big Five Canadian banks have also fallen. The banks, Royal Bank of Canada (TSX:RY)(NYSE:RY), Toronto-Dominion Bank (TSX:TD)(NYSE:TD), Bank of Nova Scotia, Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), and Bank of Montreal (TSX:BMO)(NYSE:BMO) have been in business for over a century. The banks are essential to the everyday operations of the Canadian economy, and the banks will be here for a very long time.
So, it’s a good strategy to buy these banks when they’re cheap.
The Big Five Canadian Banks’ Valuations
Comparing each bank’s current multiple to its historical normal multiple, Royal Bank, Bank of Nova Scotia, and Canadian Imperial Bank of Commerce are the best-valued banks at the moment. Indeed, Royal Bank and Bank of Nova Scotia have fallen the most among the group (over 10% in the past year).