2026 has started eventfully. Still, though, the stock market powers on. The FTSE 100 has already broken through the 10,000 mark for the first time ever this year. But with an uncertain economic and geopolitical outlook, does that make sense? Or could we be heading towards a stock market crash?
Fear and opportunity
The answer to that question will mean different things to different people.
For some investors, a stock market crash is something to be feared. While a sharp decline in share prices may only be a paper loss (unless those shares are sold), the psychological impact of seeing such a loss can still be sizeable.
However, over the long run, I tend to believe that quality will out.
A stock market crash may send the price of a share tumbling in short order.
That does not necessarily change its underlying value. Also, it can potentially offer me an opportunity to pick up a stake in high-quality companies at a bargain price.
Market timing: tempting, but never infallible
Will that happen soon?
There are reasons that it could.
Mounting geopolitical risk and weak economic growth prospects make it hard to understand ongoing growth in many share prices. The AI stock boom looks a lot like a bubble from one perspective.
But last year demonstrated that the market can do well in the short term even in a volatile economy. Many smart investors see AI not as a bubble, but as a transformative technology that could yet push the markets higher still.
However, while it can be tempting to try and time the markets, nobody can ever do it with certainty.
Sooner or later, the stock market will crash. But nobody knows for sure whether that is just around the corner or still a long way down the road.
What I’m doing now
Sitting out of the market for prolonged period can have an opportunity cost for investors.
So I am still active and indeed have been buying some shares so far in 2026.
But I am also updating my watch list of what I think are high-quality shares I would like to buy if a stock market crash let me do so at an attractive price.
Such windows of opportunity can be short-lived, so it is important to be prepared.
I’m waiting to buy…
One share on my watch list is FTSE 100 engineer Spirax Group (LSE: SPX).
Spirax has built an enduring business by developing specialist expertise in critical industrial processes like steam. That means its clients are willing to use its services even when the economy is weak, as the firm’s engineering know-how helps its clients keep their factories and premises running.
By developing bespoke solutions in many cases, Spirax has been able to deepen its client relationships, while making itself first choice for future expenditure.
Ongoing challenges with the pace of post-pandemic demand recovery in its Chinese business remains a risk for the business.
But it has grown its dividend annually for decades. At the right price, I would gladly own this share. I see it as a high-quality British blue chip with a proven business model and ongoing growth potential.
Currently selling for 32 times earnings, however, it looks pricey to me. For now, it is on my watch list.
