3 Surefire stocks to buy if there is a stock market crash
Most people won’t be thrilled to hear this, but a stock market crash or a double-digit correction could be on the way.
To be perfectly clear, no one can predict with any long-term accuracy precisely when a crash or correction will occur, how severe the decline will be, how long it will take or, in many cases, what will precipitate a move lower in the broader market. But one thing is clear: disruptions and corrections are a normal part of the investment cycle and the price of entry to the largest source of wealth on the planet.
History is not the market’s friend in the short term
At the moment, there is There is no shortage of tail wind to the stock market crash. In particular, history does not seem to be the friend of the standard Standard & Poor’s 500 (SNPINDEX: ^GSPC) short term.
For example, the widely followed S&P 500 behaved similarly after each of the previous eight bear market bottoms, dating back to 1960. Within three years of rebounding from its bottom, the S&P 500 has always had one or two instances of falling By at least 10%. Recovering from the bottom of a bear market is a difficult process that takes time. With the broad-based index doubling in value in less than 17 months, there’s a good chance we’re long overdue for some of the ‘highs’.
Date No fan for extended ratings, As for. As of business close on Monday, October 4, the price-to-earnings ratio for the S&P 500 in Shiller was north of 37. Shiller P/E takes into account inflation-adjusted earnings over the past 10 years. While access to information online has helped expand the P/E multiples since the mid-1990s, history is quite clear that bad things happen when the Shiller P/E of the S&P 500 exceeds 30. In the previous four cases this happened, the index gave up Broad about at least 20% of its value.
Even the history behind the use of marginal debt is troubling. Although it is perfectly normal for outstanding nominal margin debt to increase over time, it is Abnormal In order to use margin and debt to rise very quickly in a short time frame. There have been three cases since 1995 in which the use of margin and debt has jumped by at least 60% in a given year. Two of these cases were just before the dotcom bubble burst and the financial crisis began. The third instance is in 2021.
The schedule appears to be a set of big, healthy declines in the S&P 500.
A crash or sharp correction is the perfect time to buy these proven stocks
While large market moves are known to cause investors to worry, it is also a perfect opportunity to pounce. You see, while history is not the market’s short-term friend, it is undoubtedly the The biggest ally for long-term investors.
For example, there hasn’t been a 20-year period in circulation over the past century when the S&P 500 tracking index would not have generated a positive annual total return for investors. A crash or correction is just an opportunity to buy large companies at a discount.
If this latest sale turns out to be a crash or correction, the next three confirmed stocks can be bought with confidence.
Few stocks have More proven returns generated For the long-term investors of the Warren Buffett conglomerate Berkshire Hathaway (New York Stock Exchange: BRK.A)(New York Stock Exchange: BRK.B). Since taking over as CEO in 1965, Buffett has overseen an average annual return for the company’s Class A (BRK.A) stock of 20%. In all, taking into account Berkshire Hathaway’s return to date, Buffett has generated approximately $600 billion in shareholder value and generated a return of nearly 3,300,000% in 56 years.
Although there A laundry list of reasons for Buffett’s success, his inclination towards cyclical actions plays a large role. Although the Omaha Oracle is well aware that economic downturns and recessions are inevitable, it also recognizes that periods of expansion tend to last longer. Thus, he has mobilized Berkshire Hathaway’s investment portfolio with banking stocks, technology stocks and consumer-staple goods companies that will thrive during the expanding economy.
Another reason Berkshire Hathaway has given such amazing returns is Buffett’s focus dividend stock. While Berkshire is not paying a dividend, it is on track to raise more than $5 billion in dividend income in 2021. That’s roughly a 5% return, relative to the cost basis of the Berkshire property. Because dividend stocks are always profitable and time-tested, they fit the bill for what Buffett is looking for in a long-term contract.
Long story short, riding Buffett’s tail was often a smart move.
Another guaranteed stock that is constantly being handed over to its shareholders and would be ideal to buy during a stock market crash Salesforce.com (New York Stock Exchange: CRM), which provides cloud-based Customer Relationship Management (CRM) software solutions.
For those unfamiliar with CRM, it is used by consumer-facing businesses to improve customer relationships and increase sales. It can be used to deal with service or product issues, oversee online marketing campaigns, and perform predictive sales analytics for an existing customer base. What is particularly noteworthy about CRM software is that it finds its way into non-traditional sectors, such as finance and healthcare.
Cloud-based CRM software offers two-fold growth potential through at least the middle of the decade, and Salesforce It is at the heart of this rapidly growing trend. According to IDC, Salesforce controlled 19.5% of global CRM spending in 2020, a full percentage point more than the share inspirationAnd succulentsAnd Microsoft, And Adobe I owned last year on a sum Basis. A little bit of stock market turmoil doesn’t change the demand for CRM software solutions or weaken Salesforce’s leadership for market share.
What’s more, Marc Benioff CEO He was an acquisition expert. The acquisitions of MuleSoft, Tableau, and most recently Slack Technologies have added to the company’s cloud-based ecosystem and should allow annual sales to more than double to $50 billion over the next five years. Any discount investor who can receive Salesforce shares should be considered as a gift.
the third Stocks that are guaranteed to buy in the event of a stock market crash or correction He is the alphabet (Nasdaq: Google)(Nasdaq: Google), the parent company of Internet search engine Google and provider of streaming content on YouTube.
When it comes to global searches on the Internet, there is Google and everyone else. The thing is, “everyone else” can barely move the needle. According to GlobalStats, Google captured 92% of the worldwide search engine market in September. Looking back a couple of years, it’s pretty much the same, with Google maintaining an extension 91% to 93% of global searches are on the Internet. As an obvious move for advertisers, Google’s Alphabet is benefiting greatly from long periods of US and global economic expansion.
What may be more exciting than Alphabet’s true monopoly on Internet search is the additional projects that are rapidly growing for the company. The YouTube streaming service provider saw ad revenue grow 84% in the second quarter, with annual sales playback reaching $28 billion. YouTube has quickly become one of the most visited social sites on the planet.
Meanwhile, Google Cloud had 54% sales growth in the quarter ending last June, and now has an annual turnover of over $18 billion in sales. Google Cloud is the third largest player in cloud infrastructure and should grow into a major source of operating cash flow for Alphabet over time. over there absolutely for no reason So that Alphabet is not on your buy list in the event of a market crash or correction.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of Motley Fool’s premium advisory service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.