The Motley Fool

Waiting for the next stock market crash? I’d buy cheap FTSE 100 shares today

Image source: Getty Images

Recently, there has been a lot of press coverage over the economic fallout that the coronavirus outbreak will cause. Although the news is certainly worrying, a second stock market crash isn’t guaranteed.

Year-to-date, the FTSE 100 has already fallen by 18%. I think this means that there are already many shares trading at a cheap valuation. Is it worth waiting for a hypothetical second market crash, or to buy shares now?

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...

Second stock market crash

The prospect of a second market crash is far from certain. A future recession is now talked about as an expectation, and we already have indications on how the virus will affect businesses operations.

Declining consumer confidence will impact the economy, and will probably result in job losses. Of course, a lot depends on whether there will be a second wave of the coronavirus, in which case I imagine there will certainly be another market crash, sending FTSE 100 shares tumbling. However, the FTSE 100 index has had a bit of a rally recently, increasing by 24% since its low-point in March. 

With a deep recession potentially looming, you should hold off from buying shares, right?

Not necessarily.

Buying cheap FTSE 100 shares

I wouldn’t encourage buying shares in industries that have been on the brink of disaster since the coronavirus outbreak struck, like airlines or international travel companies.

However, I think there is an opportunity to buy cheap FTSE 100 shares if you’re being careful with your investments. There is a chance to buy resilient businesses with a competitive edge against rivals in this market. Companies operating in localised travel or selling cheap consumable items are ticking boxes for me at the moment.

In addition to the resilient companies already in a strong position, we should be aware that consumer habits will possibly change in the future. Other organisations will benefit from this situation.

As well as seeking out the opportunity to buy cheap FTSE 100 shares, there is another way that investors might be able to lessen their risk. This is by pound-cost-averaging, where a set sum is invested at regular intervals. By investing in this way, investments will be made when the market goes up and down. Over time the price paid for shares averages out.

Hunting shares

Would I wait for the next market crash before investing?

No. There are plenty of FTSE 100 companies still trading profitably. Some of these shares look cheap to me, and I feel the market is unfairly pricing them. As a long-term investor, I’m prepared to buy and hold shares for decades.

However, in these times, investors need to exercise caution. We could still be feeling the ramifications from the coronavirus for years to come. Surely we will see more businesses and industries suffer in the short term.

However, with lots of FTSE 100 shares looking cheap, I’d be buying shares now to benefit from the likely long-term recovery of the market.

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 has no position in any of the shares mentioned. 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.