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How to prepare for the worst

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Bear in a suit faces a price drop Stock market crash Stock market crash

As global geopolitical conditions worsen, I am preparing for the worst in my portfolio. So far, investors have been spared a stock market crash. But that’s no guarantee that one isn’t imminent. Investors and the market in general are incredibly nervous right now. Anything could trigger a market sell-off.

Still, there is no guarantee that we will see a stock market crash. It is impossible to say what the future holds for any asset or the geopolitical situation. Stock markets could fall further, or they could suddenly rebound.

That is why I focus on investing in high-quality companies that should thrive no matter how the world economy develops in the future.

Stock Market Crash Protection

There are many of these companies in the London market. One of these companies is London Stock Exchange. This organization controls the UK stock market and also has a strong position in the European financial markets. In addition, it has a growing presence in the international financial data market.

In fact, the volatility of the stock market could be good news for this group. It generates income from stock trading, and a stock market crash could result in more trading. Unfortunately, the company is unlikely to get away with it.

It could suffer if the number of new companies entering the market drops significantly. This IPO deal makes a lot of money for the group. Earnings on the London Stock Exchange could collapse if companies withdraw IPO plans. Despite this risk, I would like to buy the shares in my portfolio today.

Another investment I would add to my portfolio to protect against a potential stock market crash is this Capital Leverage Trust. This mutual fund seeks to protect and grow investors’ capital by building a defensive investment portfolio. There is no guarantee that it will protect investors from all market downturns, but its diversified portfolio does offer some protection against uncertainty.

get defensive

I’m also preparing for the worst by staying away from expensive growth stocks. In the past, investors have been willing to pay a high price for growth stocks. In the event of a stock market crash, this may no longer be the case.

Investors could divert their money from these growth stocks to protect their portfolios from further losses. In an uncertain environment, the companies that the market expects the most are often the first to suffer.

And finally I would like utilities National Network acquire. The group has a defensive monopoly in the UK electricity market. This market is unlikely to experience a sudden drop in demand in the event of a stock market crash.

The only major challenge for the company is the regulatory environment. Regulators essentially dictate how much money you can take from customers, which could slow long-term growth.

Still, I think National Grid, along with the other companies mentioned above, could help protect my portfolio from a stock market crash.

Stock Market Crash: How to Prepare for the Worst The article first appeared in The Motley Fool Germany.

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This article was written by Rupert Hargreaves and was published on Fool.com on 3/6/2022. It has been translated so that our German readers can join the discussion.

The Motley Fool UK does not own any of the above shares. Opinions about companies mentioned in this article are those of the author and therefore may differ from the official recommendations we provide on our subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that by consider a variety of ideas, we become better investors.

Motley Fool Germany 2022

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