Hearing the word ‘recession’ can send fear coursing through your veins and dread flooding your body. What is to become of us all as we head for the worst recession the world has known in modern times?
As desperate as things are, the stock market is not going anywhere, and businesses are doing their utmost to buckle up for an eventful ride ahead. So I think investors need to think logically and long term when choosing the FTSE 100 stocks to invest in. As the old saying goes: “Fortune favours the brave”. Therefore, those brave investors who choose stocks wisely will be rewarded in years to come.
Original FTSE 100 constituents
The FTSE 100 launched in 1984 and of the original constituents, I favour the following companies. Below are businesses I think will continue to stand the test of time and get through the coronavirus recession.
So which firms make my list? Associated British Foods, BP, Royal Dutch Shell, GlaxoSmithKline, Reckitt Benckiser, Tesco, Johnson Matthey and Smith & Nephew.
Some are riskier than others and the road ahead may not be smooth. For instance, the oil price is set for further volatility, which will constrain BP and Shell. Tesco is facing increased overheads, and online competition caused by the pandemic. Meanwhile, Associated British Foods is losing money with the closure of its Primark stores.
I do not see any of these companies going out of business though, so as far as long-term investments go, they are among the better choices available.
Cultivating a long-term mindset
When you buy a share, you become a part-owner of that business, sharing in its future profits and growth. Keep this in mind when you are looking for stocks to buy. Consider the company, its financial stability, its potential for growth and its staying power. Is it providing something that is in demand? Is it at risk of being outpaced by competitors?
As companies scale back production and job losses mount, investors should look to the companies best prepared to weather the pandemic.
Fear and greed can prevent you from investing wisely. Fear of missing out can make you buy stocks you later regret, and greed can cause you to get carried away on a stock-buying spree. Equally, fear can stop you from investing at all.
If you can turn a blind eye to short-term price fluctuations, a carefully chosen stock will pay off in the long term. Many company valuations are below their long-term averages, which makes them attractive buys. Some of the world’s most successful investors, including Warren Buffett, follow this tried and tested strategy.
Although past performance cannot guarantee future performance, it can act as a guide. Those FTSE 100 companies that have been constituents since the beginning have survived so far, and I am convinced many of them will still be around 10 years from now.
Kirsteen owns shares of GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Associated British Foods and Tesco. 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.