At the start of this year, more than a few people were nervously weighing up the prospects of a stock market crash.
Yet here we are in the middle of December and the FTSE 100 index of leading UK shares is 18% higher than it was at the start of the year. Stateside, the S&P 500 stock index has moved up similarly, by 16%.
It has not been a smooth ride. Back in April we saw a stock market correction in the FTSE 100, while from mid-February to early April the S&P 500’s fall of 19% came very close to the standard definition of a stock market crash (a 20% or more fall in a short period of time).
Looking at it today, though, this year has so far delivered a strong performance in the market.
By contrast, though, economic performance has been mixed. The UK economy is struggling to grow at all, while the US economy has also sent out mixed signals over the course of the year. Looking at the US economy aside from the AI phenomenon, this has been a tough year in many parts of the economy.
So, as an investor, ought I to be preparing for a stock market crash?
Always getting ready
The answer, to my mind, is yes.
But that is not because I specifically fear a crash soon. It is because the savvy investor can potentially benefit by always being ready for the prospect of a crash.
Sure, there are reasons to be fearful that the market could crash soon: a weak economy, some dizzying AI stock valuations, and geopolitical uncertainty are among them.
But there were reasons to fear a crash at the start of 2025 too. In reality, nobody can time the market with total confidence.
What we do know, however, is that sooner or later the stock market will crash. History has taught us that.
I think it pays to be ready, so one can swing into action and go hunting for bargains that may be short-lived!
Suddenly unloved – or unlovable?
As an example, let’s go back to April.
At one point in mid-March, shares in Games Workshop (LSE: GAW) sold for around £149 apiece. Within weeks, they were down to £124 each.
The FTSE 100 fantasy gaming company has global sales, although its manufacturing footprint is focused on the UK. The fall in the share price suggests that investors fretted about the impact tariff disputes might have on profitability.
Perhaps trade disputes could hurt disposable income levels in key markets, damaging demand for fantasy figurines.
But was a 17% share price fall in less than one month justifiable?
To me, the highly profitable company with strong pricing power always looked likely to find a way to adapt to a new trading environment, even if tariffs posed a short-term risk to profits.
Since that April low, the Games Workshop share price has rallied an impressive 60%.
Investors who spotted the mismatch between business quality and share price then have been richly rewarded within just a few months.
That is why I am making a list now of great businesses I would like to own if the next stock market crash gives me an attractive enough buying opportunity!
