The Motley Fool

I’d invest like Nick Train to survive the stock market crash and retire early

The stock market crash has tested the most experienced investors, as star fund manager Nick Train acknowledges. Despite 39 years in the business, he says he has never seen anything like it. If you stick with it though, you can still get rich from investing and retire early.

Train isn’t shunning markets right now. Quite the reverse. His investment trust Finsbury Growth & Income is fully invested. In his latest update, he shares some wise advice we have long advocated at the Fool.

Claim your FREE copy of The Motley Fool’s Bear Market Survival Guide.

Global stock markets may be reeling from the coronavirus, but you don’t have to face this down market alone. Help yourself to a FREE copy of The Motley Fool’s Bear Market Survival Guide and discover the five steps you can take right now to try and bolster your portfolio… including how you can aim to turn today’s market uncertainty to your advantage. Click here to claim your FREE copy now!

Investing like Nick Train

He writes that “being fully invested means the portfolio will participate in any eventual rally and recovery”. That is my thinking too, as history shows it is impossible to identify the bottom of a stock market crash. It is also difficult to invest after the market has turned, “because prices rally so quickly”, he adds.

There is no point in holding back in the hope the stock market crash has further to run. You will never find the absolutely perfect time to buy shares, and shouldn’t try.

Alongside fund manager Michael Lindsell, Nick Train’s approach is to identify “excellent companies” and hold them for the long term. They believe too many investors underestimate the value of what they call “survivability” in a company. Train defines it as the likelihood of being around in 10 years as a surprising number of companies won’t be, even in normal economic conditions.

He likes companies with conservative balance sheets and lots of net cash, and picks out three asset management companies in his portfolio. FTSE 100 listed Hargreaves Lansdown and Schroders, and Rathbone Brothers from the FTSE 250. All three also benefit from regular, subscription-type revenues.

As do several other holdings in Finsbury Growth & Income, including analytics and information provider RELX, and accounting software company Sage Group. These two can charge customers regular fees for services they need to stay in business.

I’d buy these to survive the stock market crash

Train also likes to invest in “beloved or essential consumer brands”, including IRN-BRU maker AG Barr, spirits giant Diageo, premium mixer specialist Fevertree Drinks, and household goods giant Unilever. People like comfort treats in an economic downturn, so sales tend to hold up.

Luxury label Burberry might seem an odd choice, as sales have been weak. Train highlights its net cash position, and reckons a burst of post-Covid-19 hedonism will see people rushing out to buy trench coats and other designer items to make themselves feel better.

There is no surefire method in investing and Train says all these companies will face unexpected challenges and dividends are not guaranteed. AG Barr has suspended its payout, for example. Others will follow.

However, history shows companies can recover from shocks surprisingly quickly. Stay invested and you will benefit. Just like Nick Train.

There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it!

Don’t miss our special stock presentation.

It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.

They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.

That’s why they’re referring to it as the FTSE’s ‘double agent’.

Because they believe it’s working both with the market… And against it.

To find out why we think you should add it to your portfolio today…

Click here to read our presentation.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Burberry, Diageo, Hargreaves Lansdown, RELX, and Sage Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.