Stock market crash? 2 UK shares I’d buy to protect myself

With the risks of a stock market crash growing, these two UK shares could offer some protection in near-term stormy waters.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Father working from home and taking care of baby

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The recent spike in government borrowing costs has ignited concerns of a possible stock market crash. However, here at The Motley Fool, we don’t try and predict short-term market movements. Instead, we focus on company fundamentals and review stocks based on their long-term qualities.

That said, recently, a considerable amount of money has flowed into some UK shares, pushing them to what appear to be unsustainable valuations. 

Therefore, I think it may be sensible to avoid these businesses and focus on firms with more sensible valuations and sustainable long term growth outlooks instead. Here are two of my favourite companies in the current market. In the event of a stock market crash, investors may even be able to pick up shares in these firms at discounted valuations. 

UK shares to buy 

In my opinion, there are only a few companies as well-positioned to profit in all market environments as publicly-traded hedge fund group Man (LSE: EMG). 

Hedge funds generally make more money for their investors in times of uncertainty. When markets are jumping up and down, there are more opportunities for these firms to take advantage of. This is what happened to Man last year. As a result, assets under management hit a record high of $123.6bn

I think another stock market crash could lead to a repeat of this trend. That’s why I’d buy the stock for my portfolio of UK shares today. 

That said, managing money can be a risky business. If Man’s performance starts to fall, investors will pull money just as quickly as they added it. The group faces other challenges as well. Heavy competition in the fund management industry is pushing down management fees and, as a result, Man’s income. 

Stock market crash investment 

Another company I’d buy for my basket of UK shares is gaming group 888 (LSE: 888). This business has been one of the biggest winners of the pandemic. With consumers stuck at home, many turned to online gambling to pass the time.

888’s net income could jump by more than 100%, thanks to this trend. And while a decline is forecast for 2021, I think investors should look past this short-term challenge. With over £100m of net cash on the balance sheet, the group is well-financed and has plenty of capital to acquire peers to drive growth. 

But while I think this is one of the best UK shares to buy for a stock market crash, it does have its challenges. Gambling is a highly regulated industry, and the government could introduce new regulations which would hurt profitability at any point. There’s also the risk of fines and penalties if the group doesn’t adhere to existing rules.

All of these challenges could severely impact shareholder returns if the group runs into trouble. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young black man looking at phone while on the London Overground
Investing Articles

This 10.6% yielder beats every dividend share on the FTSE 100. Can it last?

Harvey Jones couldn't resist the double-digit yield on offer from this FTSE 100 stock. Now he'd like to get some…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

With the FTSE 100 flying, I love the look of this company

The FTSE 100 index has been in rally mode over the last few months, but I think one of it's…

Read more »

Investing Articles

17% of my Stocks and Shares ISA is invested in these 2 UK shares

Stephen Wright looks to focus on investments in companies that have strong competitive advantages. And two UK shares stand out…

Read more »

Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA into Lloyds shares

Harvey Jones bought Lloyds shares last year and is kicking himself for failing to buy even more of them. The…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Apple is still my favourite company in the S&P 500, here’s why

Apple recently unveiled a lot of new software at a developer conference. Here's why the tech giant is still my…

Read more »

Investing Articles

5 great value UK companies I’d buy in a Stocks and Shares ISA and aim to hold for decades 

Harvey Jones is getting to work on his Stocks and Shares ISA. He thinks these five firms have solid income…

Read more »

Value Shares

Are GSK shares a bargain after falling 11%?

GSK shares have taken a hit in recent weeks due to Zantac uncertainty. Here, Edward Sheldon looks at whether they’re…

Read more »

Investing Articles

Nearing £5, could the Rolls-Royce share price hit £6?

The Rolls-Royce share price has soared in the past year. Our writer thinks there could be a strong runway ahead…

Read more »