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.
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:
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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.