You don’t need to be a trader to follow the stock market. The rise and fall of certain stocks, as well as the general health of the market, is always interesting, as it reflects a combination of cultural, political, and societal events. But even the most ardent follower of the stock market does not have the bandwidth to follow every market across the world.
For this reason, many people have overlooked the recent rise of the Canadian stock market. Canada’s stock exchange has seen an upward trend recently, rising a full 5.5% in a single month. This has led to a lot of excitement, anticipation, and also caution.
What is going on in the Canadian stock market? Is this rise as unstable as that of the American market?
The Overvalued U.S. Market
We need to see the Canadian stock market’s rise in context to better understand why it is happening and whether it is sustainable. To do so, let’s take a look at what is going on in America at the moment.
The U.S. stock market has been on the rise since the middle of 2020. After the major financial crash triggered by the pandemic, stocks started recovering, then continued soaring well past their pre-pandemic levels. This was not surprising, considering that traders took the opportunity to buy when the stocks were at their lowest.
Few people expected this upward trend to last, and yet it has continued for over a year now. While this is in some ways exciting, most experts are preparing themselves for, at the very least, a sharp correction. Traders are expected to start selling their stocks the moment the market stagnates, leading to a crash.
In this context, U.S. stocks are now considered overvalued. There is currently high demand, making them look extremely attractive, but that demand is generated not by economic health but by the current appetite of traders.
In this context, it is easy to assume that Canadian stocks will experience the same correction. Looking at the patterns, you see strong similarities. However, there are reasons to believe that Canadian stocks are not actually overvalued, but are rather doing well on their own accord.
In October, the Canadian stock market posted its longest streak of gains ever, adding CAD191 billion of value. One of the big winners is Shopify, Inc. Shopify, Inc. is a Canadian eCommerce company, headquartered in Ottawa, Ontario. They operate worldwide, providing boutique service to stores looking to build an online presence.
Shopify is the platform provided through which store owners build their eCommerce presence. Shopify, Inc. has seen huge gains on the Toronto Stock Exchange in recent weeks, and are one of the big players in the current rise of the Canadian stock market.
The difference to the American stocks making major gains is that Shopify, Inc. is making organic gains. In a post-pandemic world, with every store needing at least an online equivalent, if not operating entirely online, the Shopify platform is very attractive.
Shopify, Inc. is among the best Canadian stocks right now. Other sectors which are seeing major growth include the healthcare sector, financials, and technology.
It is not just the strength of Canadian companies that is driving stock prices up. Canadian stock brokerages, similar to Robinhood, are also growing in popularity, leading more people to start trading for the first time. There are many Robinhood alternatives in Canada. Here is what you need to know about Canadian brokerages.
Best Canadian Stock Brokers
Canada has a fair amount of specialist brokerages that at the very least rival American stock brokers. These online stock brokers have been improving for the past couple of decades, becoming cheaper and easier to use, with more people succeeding at trading using them.
Some of the best Canadian brokerages have been around for years, while others are fairly new. All are racing to be the best choice for new and old traders alike. Wondering what some of the best Canadian stock brokerages are? Here are a few top picks.
Qtrade is making waves among expert reviewers. They are one of the brokerages breaking down the barriers to trading by offering free buying and selling of ETFs. Their trading fees are relatively low at just CAD8.75, and regularly offer promotions. They are reliable, with great customer service and are trusted by many Canadians.
Questrade comes a close second. Its offerings are as close to those of Qtrade as its name is! Commission-free ETFs, low-cost trading fees, and excellent promotions have made them a consistently popular brokerage.
There are other options if the above two don’t suit your needs or personality. RBC Direct is Canada’s biggest bank and therefore is trusted by many Canadians. However, their high commissions and high fees make them less attractive. BMO Investorline is another big bank brokerage that is trustworthy but does not offer the most cost-effective trading experience.
Considering getting into trading in the Canadian stock market? It is worthwhile having an idea of the best Canadian stocks in November 2021.
Best Canadian Stocks
As mentioned, Shopify, Inc. is one of the best stocks to own at the moment. It has seen an upward trajectory over the past few weeks. However, you may be wary of buying high if you do not already own Shopify stock.
Fresh produce supplier Village Farms International Inc. has seen major gains as well, with a recent increase of 10.8%. While gold prices slipped, materials are up.
Energy has also been strong over the past few months. The sector fell 0.6% on Friday 12 November, but there is optimism around it rebounding.
Choosing the best Canadian stocks at the moment is tricky because of how well the market as a whole is doing. It is worthwhile doing a fair amount of research so as to choose the stocks which are still cheap but are likely to grow in the coming weeks.
Will there be a correction?
There are some who predict that the U.S. stock market crash will not happen. But many expect a correction, as stocks are overvalued. Is that going to happen in Canada?
At the moment, the signs are good that Canada’s stock market will continue to rise. The stocks that are succeeding are doing so organically, with companies that are seeing success due to real demand. There is no sign as things stand that stocks are overvalued.
Therefore, a correction is unlikely. It is always good to have some caution, but that is not to say that you should avoid Canadian stocks. If you are interested in trading, you can choose the best Canadian stock brokerages to get the most out of the Canadian market.
(Devdiscourse’s journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)