It happened during the great depression (AKA the Wall Street Crash of 1929), and most recently it happened during the covid 19 pandemic - what SHOULD you do when the stock market crashes? (This is no ordinary bear market).
Well, while inexperienced investors often rush to sell all of their stocks at the first sign of a stock market crash, smart investors see stock market crashes as the ideal time to cheaply purchase stocks.
What stocks to buy when the market crashes:
If you're interested in purchasing stocks to build your investment portfolio during a stock market crash, keep reading for some of our best investing tips. If you keep a clear head and act logically it's possible to come out of the next crash with a sizable profit.
Blue chip stocks/Dividend Stocks
There are two key types of stocks to add to your investment portfolio:
- Stocks that you believe will appreciate in value over time.
- Stocks which you hold in order to earn dividends as a form of passive income.
Blue chip stocks (sometimes referred to as dividend stocks) are known for paying out competitive, regular dividend payments and are well worth purchasing in the event of a downturn in the stock market.
One example of a blue chip stock to purchase is Johnson & Johnson.
Another reason why Johnson & Johnson is a relatively safe stock to purchase during a crash is that it's a diversified business that operates in the pharmaceutical industry as well as the consumer health industry and the medical equipment industry.
If one of the industries in which Johnson & Johnson operates in experiences negative growth, its stock price won't be as volatile as the stock price of businesses that operate in a single industry.
As Johnson & Johnson is not reliant on a single industry. So in the long term, Johnson & Johnson stocks should increase in value after a crash.
Other key examples of stocks to purchase in a market crash include:
While Disney was hit hard by the closure of some of their theme parks during the 2020 global pandemic, Disney is still a wise stock to purchase as like Johnson & Johnson Disney has a portfolio of highly diversified assets.
For example, not only does Disney own large properties that operate as theme parks but Disney also offers their own streaming service Disney+ and owns the rights to TV channels such as ESPN as well as lucrative franchises such as the Star Wars franchise and the Marvel franchise.
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Russia is attacking Ukraine.
Stocks have been plummeting as a result.
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But this story is moving quickly.
Even as I write, Biden is announcing new sanctions.
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Healthcare Stocks:
Healthcare stocks are unusual as they rarely take large hits and tend to be resilient stocks to purchase during times of economic uncertainty.
This is in part due to the fact that regardless of how the US economy fares, individuals still require healthcare procedures and pharmaceutical drugs.
An example of a stock which you may want to purchase during an economic recession is Intuitive Surgical which is one of the United States' largest producers of surgical systems.
Three Further examples of recession proof healthcare stocks to invest in include:
All three of which have proven resilient during previous economic downturns.
In fact, Bristol Myers Squibb's revenue increased during the past two recessions and remained resilient during the 2020 global pandemic, while on the other hand, hospitals across the US continued to pay Medical Properties Trust rent, throughout the past two recessions.
In total, Medical Properties Trust owns over 390 properties which are spread out across 34 different states.
Stocks from companies who have more cash on hand than debt:
Many expert investors believe that Ford Motor Company could be a wise stock to invest in if the stock market plunges. The reason being; Ford Motor's executives have made changes to the way their business operates since the last two stock market crashes.
While Ford Motor performed poorly during the last two stock market crashes, Ford Motor has ensured that it always has a healthy cash reserve to fall back on during a stock market crash.
While the motor industry was hit hard during 2020, Ford Motor proved its resilient nature and by the end of 2020 Ford Motor's cash on hand was approximately 7 billion dollars more than its debt.
So if you want to purchase new stocks during an economic recession it's well worth searching for companies that are well equipped to survive a stock market crash.
Industrial stocks:
While the price of industrial stocks may decrease during an economic recession, history has shown that the price of industrial stocks quickly rises during the first phases of an economic recovery.
In order to get the best possible prices for your industrial stocks, it's a wise idea to invest in industrial stocks when they are at their lowest price.
One reason why industrial stocks tend to recover quickly is that after a recession there is usually high demand for industrial products and services.
Some examples of key industrial stocks which you may want to add to your stock market crash shopping list include:
When you're looking to purchase industrial stocks, opt for businesses that boast low operating costs and diversified operations.
3M, for example, operates in numerous industries the industrial industry, the safety industry, the health care industry, the consumer industry, the electronics industry, and the transportation industry.
Technology stocks:
It's also worth stockpiling technology stocks as technology stocks have become some of the stock market's most prized stocks and technology stocks tend to recover well after periods of an economic downturn.
Some stocks to consider investing in include:
Keep in mind that businesses who have a solid business plan today are likely to survive a future stock market crash.
Precious Metals
One final thing to consider; precious metals.
Dundee Precious Metals Inc.
The Canada-based company deals in the mining of different precious metals in several key sites around the world. These include three subsidiaries:
- Chelopech -- based in Bulgaria and operates many gold, copper, and silver mines;
- Krumovgrad - which focuses on the development of a gold property also in Bulgaria;
- and Tsumeb - which controls the company's concentrate facility in Namibia.
With the wide array of facilities centered on precious metals, Dundee Precious Metal Inc. also engages actively in several acquisition and exploration projects for gold all around the world.
Sibanye-Stillwater Ltd.
This South African-based company is a rising producer of precious metals. It also possesses a diverse portfolio of metal operations that extend well beyond Africa alone. They are currently ranked 3rd in gold production, 2nd largest producer of palladium, and are also the largest producer of platinum in the world.
GoldCo Precious Metals
GoldCo are who I recommend for Gold & precious metal IRA's. Essentially, they help their customers transfer their retirement investments into Gold & Silver IRA's, which can be great for a long-term investment.
They're one of the top trusted Gold IRA companies in the USA. They've got a 5 Star Rating on Trust Pilot as well as an A+ Rating with the BBB, which is why I do recommend them.
To learn more about GoldCo, see my review here: Goldco Review (Gold & Precious Metal IRA’s)
In conclusion:
A stock market crash shouldn't be cause to panic and is simply a time to reshuffle your investment portfolio and to purchase key stocks in resilient industries which will make a quick recovery. In order to make a sizable profit.
As if you keep a clear head and use the investment tips which have been outlined above to carefully handpick stocks, you should come out of the next stock market crash as a winner.
What Next?
Over the years I've reviewed DOZENS of Investment newsletters. As a result of this, I've also spent quite a bit of time doing reviews of my FAVORITE Stock & Investment Newsletters, which you can read below!
I recommend checking out The Power Gauge Report, Louis Navellier’s Growth Investor, Stansberry’s Investment Advisor or Quick Income Trader, or One Ticker Trader.
These are all created by experts at the VERY top of their game, and are 100% worth checking out!