At the start of the year, the outlook for the stock market in 2025 felt fairly uncertain. Since then, we have seen some sizeable economic and geopolitical surprises. The stock market on both sides of the pond has shown a high level of volatility, notably following April’s announcement of US trade policy.
Overall, though, the market has not done too badly. In fact, yesterday (11 July), the FTSE 100 index of leading British companies hit a new all-time high.
The FTSE 250 is up 5% since the year began, but remains around 11% below its all-time closing high back in 2021.
Given how well the FTSE 100 has been doing, despite some weak economic indicators, could we be heading for a crash in the second half of the year?
Market timing is hard, if not impossible
Autumn has historically been a volatile time in markets. Recent examples include the September 2008 implosion of Lehman Brothers and the Black Monday crash of October 1987.
Sooner or later, we know that there will be another stock market crash. Markets are cyclical.
What we do not know is when that crash may happen.
I do think there are indicators that may be pointing to potential triggers for a crash later this year. For example, UK economic growth has stalled, a lot of companies are reporting earnings reduced by higher staff costs, and mercurial US trade policy is putting companies off spending large sums of money in some areas.
But I saw reasons to be concerned about the first half of the year too – and the FTSE 100 ended up going from strength to strength!
It is simply not possible to time the market. A highly educated guess may turn out to be right in the end – but it is still no more than a guess.
Here’s my plan
That explains why I am not spending time trying to predict when the stock market may next crash.
I think a more productive use of my time is to get myself ready for when it does. After all, a stock market crash can throw up some brilliant buying opportunities – but they may be short-lived.
So, for example, that is why I am acting now to update my wish list of shares I would like to buy, if I could get them at an attractive price.
One share on my list is FTSE 100 engineering specialist Spirax Group (LSE: SPX).
With its focus on commercial customers, Spirax is far from a household name. But it has honed a business model selling and servicing vital engineering components. With an installed customer base, proprietary product offering, and deep, specific expertise, Spirax has developed a profitable, sustainable business model.
55 years of dividend growth
Revenues slipped slightly last year but came in just below the prior year’s all-time high. Net profit of £191m equated to an 11% margin. Spirax’s business model has enabled it to increase its dividend per share for 55 years on the trot.
However, the share price has fallen 10% so far this year as investors fret over the risk to profits posed by ongoing weak demand in China.
Despite that fall, the price-to-earnings ratio of 24 remains too rich for my tastes. Still, Spirax is firmly on my stock market watch list!
