Why I’d start preparing for stock market crash part 2 today
July 5, 2021
Why I’d start preparing for stock market crash part 2 today The world economy’s uncertain outlook could prompt a second stock market crash in 2020. Risks such as political challenges in North America, Brexit and the ongoing coronavirus pandemic may contribute to weaker investor sentiment that sends share prices lower.Furthermore, market declines have taken place fairly frequently in the past. Therefore, planning ahead for their occurrence could be a prudent strategy.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…You may be in a strong position to survive a market downturn and prosper from its recovery through buying the best companies at the lowest prices today.The risk of a second stock market crashA second stock market crash could realistically occur in the near term. The outlook for the world economy is extremely challenging. That’s despite many stock prices having rebounded following the rapid downturn in global stock markets earlier this year. Rising unemployment in many major economies, weak consumer confidence and poor financial performances from many businesses may cause investors to become increasingly risk-averse.Furthermore, upcoming events such as the US election and Brexit may affect trading conditions for some businesses and sectors. Alongside this, the coronavirus pandemic is a known unknown that could improve or worsen before the end of the year. Together, these risks may be sufficient to lead to greater selling among investors in the stock market.Regular downturnsOf course, a stock market crash is not a new event. Stock prices have always been volatile at times since their inception. They have frequently been impacted by political, economic and other events that change the prospects of a wide range of businesses and impact significantly on investor sentiment.Therefore, it is good practice to ensure that your portfolio is always prepared for a potential fall in stock prices. This means that your holdings should not be overvalued. Otherwise, a lack of a margin of safety may mean that they suffer to a greater extent versus those businesses with valuations that factor in the potential for a downturn. Similarly, holding businesses with the financial strength and market position to overcome a period of weaker revenue growth could be a simple means of preparing for an economic downturn.Capitalising on weak stock market performanceA stock market crash could also present buying opportunities for long-term investors. Cheaper shares can deliver superior capital gains versus the market. As the recent bear market showed, high-quality businesses can have low valuations during a downturn as a result of weak investor sentiment towards the general equity market.As such, holding some cash in preparation for the next downturn could be a shrewd move. It may mean you can buy stocks at cheaper prices for the long run. This may provide peace of mind ahead of the next downturn in stock prices. See all posts by Peter Stephens Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Enter Your Email Address Image source: Getty Images “This Stock Could Be Like Buying Amazon in 1997” I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Peter Stephens | Thursday, 8th October, 2020 Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!