Home Stock Market 1 stock to buy BEFORE a stock market crash – The Motley Fool UK

1 stock to buy BEFORE a stock market crash – The Motley Fool UK

by callingemout
Businessman looking at a red arrow crashing through the floor

The idea of buying a stock before a stock market crash might seem like a terrible idea. On the face of it, if I’m anticipating a stock market crash, shouldn’t I wait until after to do my buying, when they’re at lower prices?

I don’t think that this is a great idea. The main reason I don’t aim to do that is I don’t know when a stock market crash might happen. And with the Bank of England warning of double-digit inflation, I’m not enamoured with the idea of keeping my money in cash as inflation pushes stock prices (as well as the price of everything else) higher. I think there’s a better strategy to prepare for a crash.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the current situation in Ukraine… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Click here to claim your free copy now!

Warren Buffett

As is often the case when I think about investing strategies, I’m looking to Warren Buffett for ideas. Buffett says many things about investing. Some are funny. Some are informative. A few are neither. Many are both. One of my favourite Buffett quotes is the following:

It’s only when the tide goes out that you learn who has been swimming naked. 

Buffett’s point here is that all kinds of bad investments can look good in favourable market conditions. Low interest rates and plentiful supplies of money can make all kinds of weak businesses look like great investments. But this is temporary. It always comes to an end eventually. And when it does, investors who commit money on pure speculation end up getting exposed.

Following Buffett’s advice, my plan to prepare for a stock market crash is to get my money into solid companies that won’t find themselves caught out when the tide of easy money and low interest rates turns. There’s an obvious one that I’ve been buying for my portfolio. 

Berkshire Hathaway

Unsurprisingly, the company is Berkshire Hathaway (NYSE:BRK-B). Let me be entirely clear here. I am not saying that Berkshire Hathaway’s share price won’t go down in a stock market crash. It almost certainly will. If the price of other shares fall, Berkshire will look less attractive compared to those stocks and the price of Berkshire Hathaway shares will fall too. But I think that the impact will be lessened by the company’s fortress-like balance sheet.

At the end of 2021, Berkshire had just under £147bn in cash. This means that it has more than enough capital on hand to meet its obligations as well as plenty available to seize opportunities, as they present themselves. Its AA credit rating means that it also has access to capital at reasonable rates should it need it. Whatever happens in a stock market crash, I think that Berkshire Hathaway will remain strong.

That’s one reason I’ve been buying Berkshire Hathaway shares. I happen to think that the company is one of the best investments on the stock market. But its vast cash reserves mean that I think it will fare relatively well in a stock market crash. A sudden downturn in share prices might present opportunities to sell Berkshire shares and pick up other companies at more attractive prices. But if it doesn’t, then I’d be happy owning Berkshire Hathaway shares forever. Either way, I’ll need to have an investment in Berkshire before the market crashes.

Inflation Is Coming: 3 Shares To Try And Hedge Against Rising Prices

Make no mistake… inflation is coming.

Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.

Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.

That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…

…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!

Best of all, we’re giving this report away completely FREE today!

Simply click here, enter your email address, and we’ll send it to you right away.

Stephen Wright owns Berkshire Hathaway (B Shares). The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Source link

You may also like

Leave a Comment