The Motley Fool

FTSE 100 market crash: Why I’m not focusing on buying bargains

Image source: Getty Images

Following the market crash, the FTSE 100 has fallen by 18% year-to-date. However, the index is now showing signs of a slight recovery, with an increase of 23% since its lows in March.

With FTSE 100 share prices climbing higher, investors might be questioning whether it is too late to buy shares in quality companies at a reduced price.

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...

FTSE 100 bargain shares

The coronavirus fallout will impact businesses across the spectrum. It has already affected different parts of the economy in ways that we previously wouldn’t have thought possible. This has opened up some great opportunities to buy shares in businesses at bargain prices.

However, investors shouldn’t rush out and buy shares just because they look cheap.

The economy will suffer for years, and many businesses and industries will be severely impacted. Already we’ve seen the near-collapse of certain aviation and travel companies.

In times like these, investors might flock to the corporations which are trading profitably and have good management structures in place. Therefore, these are likely to still look a bit on the expensive side to value investors. At the other end of the spectrum are the businesses that are riddled with debt, with little competitive advantage over rivals.

Fair prices

As value investors, we want to find the middle ground. The ideal situation is when we think the market has overreacted to a piece of news and unfairly priced the shares.

I love picking up a bargain. But as Warren Buffett says, it’s “far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” 

Often as investors, we want to make the most amount of money possible in the quickest amount of time. We seek out bargain FTSE 100 shares, which can often be dangerous if the proper research is not undertaken.

Instead, I’d look for a business that has a predictable revenue stream, low volumes of debt and an economic moat. Over the long term, I believe these qualities will best reward investors offer the least amount of risk. Especially when a second market crash might be around the corner.

When it comes down to it, I’d rather part with my hard-earned cash for shares in a business that I can hold for decades without worrying about the bad news its latest announcement might bring.


Dividends are a bit of a divisive topic at the moment. Some investors understandably love getting a regular payment from their holdings.

However, in light of the market crash, those investing for growth might think a business should use its capital to fund its core activities and pay off any debt obligations. Famously, Warren Buffett’s Berkshire Hathaway doesn’t pay dividends. That, of course, doesn’t mean the Sage of Omaha doesn’t love receiving them.

Personally, when evaluating a company in the current climate, I take note of prospective yields but I’m not convinced they are always totally dependable.

What I’d do now

It’s still possible to grab a bargain following the FTSE 100 market crash. However, there’s more to buying shares than price. This is an unprecedented and potentially dangerous time. Pick what you buy carefully.

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...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

T Sligo has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). 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.