The Motley Fool

Market crash: time to buy cheap FTSE 100 shares?

Image source: Getty Images.

Since the start of the year, the market crash has caused the FTSE 100 to fall by 21%. Coronavirus and the subsequent damage it’s expected to cause to the global economy weighs heavily on investors’ minds. 

There are signs of a slight rebound, however. The index has increased by 20% since its low on 23 March.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

With reports in the media about the next recession, investors might be holding off buying shares in the belief that the market could fall once again.

Market crash

Any recovery for the FTSE 100 might indeed be followed by another market crash. 

Share price fluctuations in the short term are notoriously difficult to predict. Even the greatest investors, like Warren Buffett, admit that it’s impossible to determine what will happen in the next few weeks, months or years.


Instead, it’s normally better to invest with a longer outlook.  By spending decades in the market, buying shares and reinvesting dividends, compound interest will have a chance to work its magic. This could help investors ride out the bumps and crashes along the way.

I think investors should consider trying to lower their risk by pound-cost-averaging. This can be achieved by setting up regular payments to purchase selected shares or funds. Investments might then be made when the market rises and crashes, but you’ll be able to buy the largest amount of shares when they’re cheap. Therefore, the returns to the investor will average out over time.

Historically, stocks and shares have tended to perform better than other assets over the longer term.

Cheap FTSE 100 shares

The latest market crash means that some quality companies are trading at a low valuation. For example, shares in Unilever have fallen by 3% in the year-to date. This drop means its stock is now trading at a price-to-earnings ratio of just 18. With brands like Marmite and Ben & Jerry’s in its portfolio, I believe that customers will still purchase its products even when the going gets tough.

And I’d focus on valuation rather than dividends (for now). Many companies in the FTSE 100 have suspended or cancelled dividends payments. Even Shell, previously loved by income investors, cut its dividend for the first time since World War II. Consequently, I’d rather buy stocks for the recovery potential than income prospects. That is why I’d buy cheap FTSE 100 shares in this market crash.

For investors anxious in these uncertain times, it’s helpful to look back at the history of the FTSE 100. Although the past might not repeat itself, it’s comforting to note that despite multiple crashes in its 36-year history, the market has recovered in the long term each time. Fellow Fool Peter Stephens has noted that in the past, the best buying opportunities have often coincided with the greatest periods of uncertainty.

Benjamin Graham, the mentor of a young Warren Buffett, said that investors must “believe in a better tomorrow”. Although we’re faced with unprecedented times, today’s investors really should believe that things can get better when they consider buying shares!

Do you believe in a better tomorrow?

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

T Sligo has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.