The stock market has gotten ahead of any economic recovery and is at risk of a correction or crash. We noted some time back that the stock market seems to be ignoring the economy. This should concern investors. Where to invest during the next market crash is something to seriously consider. For that matter, investors should give some thought to where they should invest before a likely correction. Here are a few thoughts on the subject.
Where to Put Your Money before the Market Crashes
Investors who are staying short can put their capital into short term bonds or CDs. This will protect your money and allow it to be available for investments when the market goes down. Another good idea is to pay off debts. Getting a better return on your investments than the rate for credit card interest can be difficult. Getting rid of high-interest-rate debt is an excellent idea during uncertain times. Long term investors may consider dividend stocks with a good margin of safety.
Best Investments during Stock Market Crash
The Motley Fool has a good article about where to invest during the next market crash. They suggest companies with high margins of profit, a large cash reserve, and the prospect of good cash flow to cover ongoing operations and debt service. Three that they suggest are MasterCard, VISA, and PayPal Holdings. Consumer goods stocks generally do well during a recession but as unemployment levels continue at Depression era levels, people will start to budget their money and only those selling necessary items will do well.
Real Estate Investing during Recession
Those with substantial cash and experience in real estate may consider these sorts of investments during a recession and market crash. The most important part is the ability to understand all aspects of real estate investment and have the management skills (and time) needed to carry projects through to completion. Having a good sense of where growth and profits will be over the coming years is necessary before looking for good real estate deals as many cheap properties are cheap for good reasons.
What to Buy during Market Crash
There are two strategies for investing during a stock market crash. One aims for short term profits and the other aims at picking up long term investments at bargain prices. In our article about safe investments if the pandemic gets worse we mentioned a company that makes Covid-19 tests. They are likely to do very well no matter how the market does and probably go up in price during a crash. But, when Covid-19 subsides, so will their stock. This could a good short term investment during a market crash. On the other hand a company like Microsoft has gone up from $150 a share to $230 a share this year. Their rally in the face of the pandemic is partially because of the movement to online work which is very likely to continue once the pandemic subsides. Companies have found ways to function just as well as before and with fewer expenses by having their employees “telecommute.” Microsoft is therefore a good long term bet and could be picked up at an attractive price when the next crash occurs.
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