The Motley Fool

How I’d invest after the worst stock market crash in 10 years

The recent market crash brought to an end a global bull market that had lasted in excess of 10 years. While it’s likely to have caused significant paper losses for many investors, it presents a buying opportunity for those individuals who have a long time horizon.

Through purchasing a diverse range of businesses with solid fundamentals, you can capitalise on the stock market’s future growth potential. It recovered from its previous crash in 2008/09 to produce new record highs, and is likely to do likewise over the coming years.

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…

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Recovering from a market crash

The recent market crash caught almost all investors by surprise. However, it’s not without precedent. The global stock market has experienced several sudden downturns in its history.

A common theme among them is that the stock market has always produced a rally that leads to new record highs. Certainly, that may seem unlikely in the recent aftermath of the 2020 market crash. However, the same could have been said during the global financial crisis and during any other previous downturn.

Investors who’ve the self-discipline to buy undervalued stocks after a market crash can generate high returns in the long run. In fact, market downturns often offer the best value opportunities due to weak investor sentiment.

A diverse range of sectors

After the recent market crash, it’s unclear which sectors will produce strong growth in the coming years. Sectors such as retail, travel & leisure, mining, energy and many others face trading conditions that are exceptionally difficult to accurately predict. They may experience a fast return to pre-coronavirus operating conditions, but may equally have limited opportunities for growth.

Therefore, investing across a broad range of sectors could be an effective means of benefitting from the stock market’s recovery while limiting overall risk. Due to weak investor sentiment, many industries that offer long-term growth potential contain companies with wide margins of safety.

Through holding a variety of them, you can reduce your reliance on a small number of businesses for your returns in what may prove to be an unpredictable investing environment.

Solid finances

Buying companies with solid finances after a market crash may also prove to be a sound move. They may be better able to cope with a period of economic weakness than their peers. They could even expand their market position at the expense of rivals that have less robust finances.

Through identifying businesses with large cash balances, access to banking facilities, and debt levels that are serviceable even with reduced revenue in the short run, you can build a stronger portfolio that has less overall risk.

It may also produce higher returns as you invest in companies that could have a higher chance of prospering in what may prove to be a period of weaker global economic growth.

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.

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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.