The Motley Fool

Don’t waste a second stock market crash! Why I’d buy the best FTSE 100 shares to get rich

Image source: Getty Images

It takes a certain strength of character to go against the investing crowd, especially in the midst of a stock market crash.

As James Montier wrote in his Seven Immutable Laws of Investing, “Humans are prone to herd because it is always warmer and safer in the middle of the herd. We feel the pain of social exclusion in the same parts of the brain where we feel real physical pain“.

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 is this kind of herd mentality that saw some investors fail to capitalise on the 2020 stock market crash.

Buying the best FTSE 100 shares at historic low valuations in late February and early March would have made you a small fortune by now. But not many of us had the gumption to do it.

What the stock market crash teaches

The 2020 stock market crash was a time of great fear and uncertainty. Nobody knew what was going to happen with the new virus spreading across the globe. Our share portfolios seemed insignificant in the face of a global pandemic. Toilet roll was suddenly at a huge premium. Remember that? Such is the madness of the herd.

And pre-2020, most people under the age of 35 had never lived through the panic of a stock market crash. Thankfully, now, we have what you could call a ‘teachable moment’ to look back on. I don’t particularly like this phrase, but it is apt.

Most FTSE 100 shares dropped at least 30% but have regained at least some of their value in the months since.

I’m not saying buying quality FTSE 100 shares on weakness is easy. It’s certainly not. While I’ve done pretty well since the stock market crash, when the sky was falling all I could think about was running for the hills.

Best FTSE 100 shares offer value

As value investors we have one distinct advantage if faced with another stock market crash.

That is being able to look beyond short-term froth and focus on long-term strength. We can look outside today’s share price and zero in on FTSE 100 shares with growing profits, earnings per share, a strong economic moat and a competitive advantage.

Everyone has a different calculation for fair or intrinsic value. Doing these kinds of simple sums is something of a lost art in today’s world.

You need only look at the froth and hype around ridiculous business models like Tesla. Elon Musk’s baby can hit $1,500 a share and become the world’s most valuable car company despite never having posted a full year of profits. A $1bn loss in 2018 was followed by an $862bn loss in 2019.

But you can get started with value-seeking by looking at free cash flows, price-to-earnings growth ratios and things of that nature. All of these metrics are freely available for the best FTSE 100 shares with a quick Google search.

It’s very hard to have thought long and hard about a particular investment and to see it do nothing for months at a time. But when the market catches up with you, it is an incredible feeling.

As Montier writes: “Valuation is the closest thing we have to a law of gravity in finance“. And nothing, not even hype, can resist gravity in the end.

“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

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.