Stock market crashes, corrections, and general periods of volatility are part and parcel of investing. They needn’t be feared but we do need strategies to deal with them.
With its attractive tax advantages, I reckon a Stocks and Shares ISA is the best investment vehicle available on the market today. That doesn’t mean it’s immune from the effects of a financial meltdown, but with some sensible precautions, we can one to reduce the potential damage from turbulent times. Here are three tips.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
When I last wrote about a market crash, I thought it would come from a loss of confidence in the tech sector rather than war in the Middle East. Technically speaking, we haven’t experienced a crash yet – typically defined as a fall of 20% from a recent peak — but if the conflict persists for much longer, this could become a real possibility.
1. Be ready
For all concerned, I’m hoping the war will end soon. And when it does, there will be many beaten-down stocks available with attractive valuations.
One of those suffering at the moment is Wizz Air (LSE:WIZZ). The budget airline’s share price is now (9 March) 40% lower than at the start of the month. And it’s fallen two-thirds since March 2022. Higher fuel costs following Russia’s invasion of Ukraine and, more significantly, aircraft being grounded because of engine problems have hit earnings.
And if flight cancellations persist and the oil prices continue to rise, the group estimates that the current trouble in the Middle East could cost up to €50m.
This is unfortunate given that the group’s trading update for the quarter ended 31 December 2025 disclosed that revenue was up 10% and passenger numbers grew 12.5% compared to a year earlier. Net losses fell from €241m to €139m. Encouragingly, the engine issue is being gradually resolved with fewer aircraft grounded. All are expected to be repaired by the end of 2027.
However, I’m not suggesting that the airline’s stock is one to consider now. There’s too much uncertainty around at the moment, which makes me think its share price has further to fall. But I think it will be worth revisiting the investment case when the conflict is over. That’s what I’m going to do, anyway. Then, with fuel costs easing, our skies fully open, and more engines returning into service, growth could resume once more.
2. Keep spreading risk
Irrespective of what happens to Wizz Air, I think it’s important to maintain a diversified portfolio. During market downturns, some stocks do better than others. For example, with their reliable earnings, utilities tend to cope better. Holding positions in a wide variety of companies and sectors is always a good idea.
3. Don’t panic
Most importantly of all, I think it’s vital to take a long-term view. Even if the war ends soon as we all hope, a future stock market crash is inevitable.
That’s not me being negative. It’s simply a statement of fact based on history. But another lesson from the past is that markets do pick up again. It might take a while but things will – more than likely – get better.
By taking a pragmatic approach, I think it’s possible to guard against the worst of the current fallout and any future crashes. And by identifying a few bargains, I believe it’s possible to benefit massively from a recovery.
