The stock market has been melting faster than an ice cream on a hot summer’s day.
First to wilt was the mid-cap FTSE 250, which is down nearly 12% since the end of February, putting it into correction territory (down 10% or more from its recent high). The FTSE 100 is holding up better, but is still nearly 9% off its recent peak.
Meanwhile, across the pond, the tech-heavy Nasdaq 100 and the blue-chip Dow Jones Industrial Average have both declined over 10%. And the S&P 500 is trending toward the 10% correction mark.
With the war in Iran expected to last another few weeks, according to Washington, there’s the potential for prolonged inflation and significant economic damage. I’m writing this after visiting four separate petrol stations to find diesel, due to panic buying.
If the conflict drags on for months, there could be fuel shortages worldwide due to disrupted Gulf state supplies. And therefore a bear market or even a crash can’t be ruled out.
Switch to cash?
During periods of volatility like this, it can be tempting to sell all one’s stocks and hide out in cash until uncertainty passes. The problem with this is that it’s extremely difficult to re-enter successfully (time the market).
Historically, most of the stock market’s best days are clustered around the worst. As a result, missing out on strong rebounds can seriously harm long-term returns. I expect a strong rebound at some point and I don’t want my portfolio to lose out.
The Vanguard graph below shows this phenomenon over 45 years.
A Nasdaq rocket
My strategy then is to keep holding the vast majority of my stocks, while selectively buying shares that have sold off heavily. One I’ve been watching fall over the past few weeks is Rocket Lab (NASDAQ:RKLB).
Now trading for $61, it’s down 38% since hitting a high of $99 in January.
Rocket Lab is an end-to-end space systems firm that could become a primary competitor to SpaceX. It offers launch services and makes satellites and spacecraft components.
Indeed, its spacecraft have been chosen to support NASA missions to the Moon and Mars, as well as the first private mission to Venus.
Over the weekend, Rocket Lab successfully launched its sixth mission of 2026, and 85th in total. Notably, this was its first dedicated launch for the European Space Agency, building on its success serving the national space programmes of the US, Japan, and South Korea.
The contracts are coming thick and fast. Earlier in March, Rocket Lab secured a $190m contract to conduct 20 HASTE launches for the US military (its single largest launch contract to date). This brought the backlog across launch and space systems to more than $2bn.
All this is translating into strong financial performance. Revenue surged 38% last year to $602m, with Wall Street expecting that to hit $1.6bn by 2028.
Plus, analysts expect the firm to turn profitable next year, boosted by its upcoming medium-lift rocket, Neutron. This is designed to compete with SpaceX’s Falcon 9.
Now, the risk here is that Neutron fails, prolonging losses longer into the future. And with the stock trading at 40 times forward sales, it’s currently too pricey for me.
But if it keeps falling, I’ll make my move.
