The Motley Fool

Forget gold and Bitcoin. I’d buy crashing stocks today and hold them forever

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

The stock market’s recent crash may lead some investors to consider purchasing other assets such as gold and Bitcoin. After all, the outlook for the world economy is highly uncertain. This may lead to lower earnings for many companies that could produce disappointing stock price returns in the near term.

However, the recovery potential of the stock market means that now could be the right time to buy a diverse range of businesses while they offer wide margins of safety. They could outperform gold and Bitcoin, both of which may face uncertain long-term outlooks.

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...

Prospects for Bitcoin and gold

The price of gold may have risen to a seven-year high in 2020, but its scope to deliver further gains may be limited by an improving economic outlook over the long run. Investor sentiment towards the precious metal has improved due in part to its defensive appeal at a time when the economic outlook is uncertain.

However, the prospect of improving GDP growth may cause investors to gradually switch their attention to riskier assets over the coming years. This may reduce demand for defensive assets such as gold.

Likewise, the future for Bitcoin could be less positive than many investors are currently anticipating. The virtual currency faces regulatory uncertainty that could limit its capacity to replace traditional currencies.

Furthermore, its limited size and the threat posed by other virtual currencies may mean that investor sentiment towards Bitcoin fails to strengthen. Due to its price being dependent on sentiment rather than fundamentals, this could lead to a disappointing performance from the cryptocurrency.

Stock market potential

In the near term, the prospects for the stock market could prove to be highly challenging. News regarding coronavirus may mean that other assets, such as gold, continue to outperform global equities in the coming months.

However, over the long run, the stock market appears to have strong recovery potential. It has a solid track record of recovering from even its very worst downturns. For example, indexes such as the FTSE 100 and S&P 500 halved during the global financial crisis. They went on to not only recover from their downturns, but to also post new record highs in the bull market in the years following the global recession.

Although a similar outcome may seem unlikely at the present time, now could be an opportunity to buy high-quality stocks while they offer wide margins of safety. This may enable investors to obtain favourable risk/reward ratios that ultimately lead to higher returns in the long run as the world economy gradually recovers.

This process may take time, which is why a long-term view is likely to be crucial for any investor purchasing stocks at the present time. But by building a diverse portfolio of stocks, you could generate higher returns than investing in other assets such as gold and Bitcoin over the coming years.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

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

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

Renowned stock-picker Mark Rogers and his 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 click below to discover how you can take advantage of this.