Should you buy these stocks in a stock market crash?
Buying these stocks in a crash could put you on a path to life-changing returns. The stock market has gotten off to a bumpy start early in 2022. The S&P 500 index's level has fallen roughly 5.5%, and the even more tech-heavy Nasdaq Composite index is down 9.5%.
What should you do with your money when the market crashes?
You could move it all into cash, you could buy gold or real estate or for that matter you could even take an aggressive approach and try to capitalize on stocks' carnage by loading up on investments designed to rise when the market falls, such as bear market funds or put options. But do I think you should actually do any of these things?
How do I know if the market is going to crash?
The single most important thing you want to confirm is your asset allocation, or the percentage of your holdings that are invested in stocks vs. bonds. That will determine how your portfolio holds up if the market takes a major dive.
How much will a stock market crash hurt your portfolio?
That’s cold comfort when your portfolio has lost 20% or even 30% of its value in a stock market crash. Just look at the market this month and you’ll know what I mean-or think back to early 2020 when the Covid-19 pandemic began.
What should I invest in when stock market crashes?
A diversified portfolio of stocks, bonds and other asset classes offers the most protection against a market crash.
Is it good to invest in stocks during a crash?
Down markets, bear markets, and stock market crashes put good companies on sale. If you have a company you believe in (and perhaps already own) you can buy shares fully believing you are making the right choice for your future, even if the bear market continues and stock goes down.
Will the stock market crash 2022?
Stocks in 2022 are off to a terrible start, with the S&P 500 down close to 20% since the start of the year as of May 23. Investors in Big Tech are growing more concerned about the economic growth outlook and are pulling back from risky parts of the market that are sensitive to inflation and rising interest rates.
Do you lose all your money if the stock market crashes?
When the market goes down, the total value of your investment decreases. In other words, the market value of your investment has changed, but you still own the same 100 shares as you did previously.
Buying these stocks in a crash could put you on a path to life-changing returns
The stock market has gotten off to a bumpy start early in 2022. The S&P 500 index's level has fallen roughly 5.5%, and the even more tech-heavy Nasdaq Composite index is down 9.5%. It's possible that even bigger sell-offs are coming down the pike.
This travel leader is on track for big wins
Keith Noonan (Airbnb): Trading down roughly 23% from its high, Airbnb stock is already a worthwhile buy for long-term investors. If market turbulence sends stocks significantly lower, the short-term rental specialist will be at the very top of my buy list.
NASDAQ: ABNB
Airbnb is a great business that looks poised for huge growth over the long term, and its stock is poised to be a big winner for patient investors. The company has already become virtually synonymous with the short-term property rental space, and it's likely just scratching the surface of its potential.
When temporary problems hit a timelessly great business, it's time to buy
Jason Hall (Mastercard): One of the biggest beneficiaries of the global shift to e-commerce, mobile computing, and digital transactions is Mastercard.
The pandemic accelerated Shopify's revenue growth
Parkev Tatevosian (Shopify): Shopify offers the tools that help entrepreneurs create an online business channel. It's no surprise the e-commerce enabler has benefited tremendously since the pandemic onset as businesses worldwide scrambled to create an online presence.
Premium Investing Services
Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.
Stock Market Crash Buys: Block (SQ)
Leading off this list of companies to consider if we suffer a stock market crash is Block, the company formerly known as Square.
Stock Market Crash Buys: Upstart (UPST)
My InvestorPlace colleague David Moadel recently headlined Upstart as a company destined to revisit its all-time high. It’s a bold statement to be sure.
Sea Ltd (SE)
A global consumer internet firm with businesses in digital entertainment, e-commerce and digital payment services, Sea Ltd is relevant just on its coverage toward burgeoning industries.
Stock Market Crash Buys: DraftKings (DKNG)
Before business combinations related to special purpose acquisition companies (SPACs) started to get a bad reputation for their dilutive impact, DraftKings represented a bright spot in this unique method of going public.
Twitter (TWTR)
Generally speaking, things aren’t looking too hot for social media, which undoubtedly would please former President Donald Trump to no end.
Stock Market Crash Buys: Peloton (PTON)
With Peloton, you don’t even need to wait for a stock market crash: it’s already happened.
Crashes and corrections are an inevitable part of the investing cycle
For the moment, catalysts are building that suggest sizable downside may await. From a historical perspective, there have been 38 double-digit percentage declines in the S&P 500 over the past 71 years. That's a 10% or greater drop, on average, every 1.87 years.
Crashes are a surefire buying opportunity
But as I noted earlier, your investing style has a lot to do with how devastating these potentially sharp moves lower in the market can be. If you're a relatively short-term trader, a crash or correction can be quite costly.
Mastercard
The first winning stock long-term investors can confidently add on a significant pullback in the broader market is payment processing behemoth Mastercard (NYSE: MA).
Bristol Myers Squibb
Another surefire winning stock that investors can gobble up during a crash or correction is pharmaceutical company Bristol Myers Squibb (NYSE: BMY).
Amazon
A third surefire winning stock to buy hand over fist if there's a stock market crash or steep correction is e-commerce giant Amazon (NASDAQ: AMZN).
The Motley Fool
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community.
Johnson & Johnson
One of the safest stocks investors can consider putting their money to work in during a steep correction or crash is healthcare conglomerate Johnson & Johnson (NYSE: JNJ).
Annaly Capital Management
The ironic truth about dividend stocks is that higher-yielding companies often produce lower real returns for investors. Since yield is a function of payout relative to price, a struggling business with a falling share price can trick income investors into thinking they're getting a great deal.
Berkshire Hathaway
A third exceptionally safe stock investors can confidently buy if there's a steep correction or market crash is conglomerate Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B).
The Motley Fool
Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community.
1. Do Nothing During a Market Crash
If you believe in your investing strategy and your current portfolio assets, don’t change your plans unless you have a good reason. When you built your portfolio, after all, you might have had a market crash just like this one in mind.
2. Go Shopping During a Market Crash
Market crashes are frequently the result of events like the emergence of Covid-19 or the news that the Federal Reserve will change its monetary policy strategy.
3. Dollar-Cost Average, Even on the Way Down
When the market is in turmoil, the safest way to go on a buying spree is to dollar-cost average your purchases. That means making purchases of a set dollar value at regular intervals, even when the market looks scary.
4. Hunt for Dividends during a Stock Market Crash
For the slightly more adventurous, down markets can be a good time to consider letting dividends drive your investment choices. Many companies share their profits with shareholders through a small dividend yield annually, a bit like banks pay interest to savings account holders.
5. Ride the Sector Rotation
A time-honored strategy for dealing with market downturns is to move money from one stock market sector to another. During times of high growth, for instance, tech stocks seem to do well. When the economy slows, meanwhile, “boring” sectors like utilities stocks tend to hold up better.
6. Buy Bonds during a Market Crash
Down markets are also a chance for investors to consider an area that novice investors might miss: Bond investing.
7. Cut Your Losses during a Crash (and Save on Taxes)
Despite our advice above, sometimes cutting your losses is the smartest investing move you can make.
How to protect assets from a market crash?
Fortunately, there are steps you can take to shield the bulk of your assets from a market crash or even a global economic depression. Preparation and diversification are the key elements of a sound defensive strategy. Together, they can help you weather a financial hurricane.
What to do if the market moves against you?
That way, if the market moves against you, you can simply deliver your shares to the broker and pay the difference in price in cash. Another alternative is to buy put options on any stocks that you own that have options or on one or more of the financial indices.
How long to sell a loss on taxable accounts?
Tax-loss harvesting is one option for losses sustained in taxable accounts. You simply sell all of your losing positions and buy them back at least 31 days later.
Is it a good idea to pay off your house?
This is especially smart if you have a lot of high-interest debt such as credit card balances or other consumer loans. At least you'll be left with a relatively stable balance sheet while the bear market roars. Paying off your house or at least a good chunk of your mortgage also can be a good idea.
