The Motley Fool

How to prepare for a stock market crash in October 2021

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.

Arrow descending on a graph portraying stock market crash
Image source: Getty Images.

Around 24 years ago, Robert Kiyosaki’s Rich Dad Poor Dad was published. And according to Amazon, it went on to become “the #1 Personal Finance book of all time.”

And now, according to several recent press reports, Kiyosaki has added his voice to the chorus of gurus predicting an imminent crash in the financial markets.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

A chorus of crash-predictors

He’s not alone. Warren Buffett’s been hoarding cash because he can’t find many stocks or businesses with valuations worth buying. Meanwhile, over recent weeks, US stock trader Mark Minervini has been sounding warnings about elevated downside risk. And The Motley Fool’s Cliff D’Arcy recently asked the question, “when will the bubble of everything burst?”

But will there be a great stock market crash in October 2021? Nobody yet knows, although there’s plenty of speculation around that one could be imminent. But in fairness, there are almost always bears around. And there’s usually something to worry about. That’s why we have the old expression that stock markets tend to climb a wall of worry.

However, crashes do happen. But should the possibility of one occurring stop me from investing? I don’t think so. Legendary fund manager and investor Peter Lynch once observed: “Far more money has been lost by investors preparing for corrections — or trying to anticipate corrections — than has been lost in corrections themselves.”

I’m watching stocks like these

So, I don’t reckon it’s a good idea for me to hang around with my portfolio in cash waiting for a crash. After all, many stocks have already eased back a fair bit beneath the headline numbers of indexes such as the FTSE 100. And we’ve been seeing a bit of a ‘stealth’ correction. For example, I’m thinking of names such as National Grid, Bunzl, AG Barr, British American Tobacco, Britvic and Boohoo.

And despite his cash-hoarding, I reckon the great investor Warren Buffett would be all over quality stocks after any crash if he saw decent value. After all, one of his mantras is to be greedy with stocks when others are fearful, and fearful when others are greedy.

So rather than wait for an obvious crash of everything, I’m going to focus on individual companies and the news flowing from them. And to do that, I’m building up my watchlist of quality stocks, such as those mentioned above, along with others. Then, when I see good value and promising prospects, I’ll be ready to pounce and buy stocks whether there’s been an overall market crash or not.

However, it’s always a good idea for me to revisit my existing portfolio of shares and re-examine each individual case for investing. If I’m nervous about the state of the markets, a little bit of portfolio pruning could be wise if it leads to me ejecting lower-conviction holdings.

So, I’m still investing and if a crash does arrive, I’ll be ready with my watch list.

And one place I'd begin research is right here:

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended AG Barr, British American Tobacco, Britvic, Bunzl, National Grid, and boohoo group. 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.

Our 6 'Best Buys Now' Shares

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.

Simply click below to discover how you can take advantage of this.