Amid market turmoil, retirees’ pain may be gen Z’s gain

For the third time in five years, Canadians are staring down a stock market sell-off, followed by extreme volatility that is wreaking havoc on their portfolios.

But what might look like a calamity for older investors in or near retirement could mean an opportunity for younger ones, according to some financial advisers.

“For young people, this is the greatest gift in the world,” said Barry Schwartz, chief investment officer at Baskin Wealth Management, of the market crash that followed United States President Donald Trump’s worldwide tariff announcement last week.

Fears of a global recession that followed sent the S&P 500 diving more than 12 per cent, shedding nearly US$6 trillion in market value, while the S&P/TSX composite index dropped 11 per cent. This marked the largest four-day decline for both indexes since 2020.

Since then, markets have been whipsawing amid social media speculation about Trump’s policies, a barrage of tariff announcements from other countries and investors looking to buy cheaper stocks or pivot from U.S. markets.

After Trump on Wednesday afternoon announced a 90-day pause on reciprocal tariffs for most countries, U.S. stocks surged upwards by about eight per cent, sending investors’ heads spinning. Thursday saw downward movement again.

Still, young people can take comfort in having years of savings in front of them to withstand the volatility. Shane Obata, a portfolio manager at Middlefield Ltd., pointed to Bloomberg data indicating American stocks have gone up 9.5 per cent a year since the end of 1927 despite several market crashes.

“Stocks tend to go up over time … so patience is good,” he said. “Younger people need to know that time is on their side.”

Schwartz said young investors, who include millennials and generation Z, should be using pullbacks to purchase an index fund or a mutual fund that they trust, or allocate their funds in high-quality businesses. He recommended picking 30 durable companies with a history of profitability and essential products and services.

These include companies with services that people use on a daily basis, such as Netflix Inc. and Spotify Technology SA, or popular store chains such as Costco Wholesale Corp. and Dollarama Inc., he said. These businesses could survive the current turmoil and reemerge strong on the other side, since consumers are likely to continue using their products and services in the future, he said.

However, Chris McHaney, executive vice-president and head of investment management and strategy at Global X Investments Canada Inc., said this moment could be different from recent selloffs.

He said younger investors buying the dip need to be prepared for the possibility that the market could take a while to fully recover.

“This crash is a little bit different because it’s policy-related,” he said, noting the next Trump social media post could send markets in a different direction, as it did Wednesday afternoon when the president called for a 90-day pause on reciprocal tariffs except on China.