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3 reasons to expect another stock market crash. And why I’d continue buying UK shares for my ISA

We’re seeing lots of ups and downs at the moment. On the plus side, UK stock markets remain stable after recovering from the decade-long lows struck in March. On the less positive side, however, indices like the FTSE 100 have failed to kick on over the past couple of months. Market tensions remain extremely high and many investors, fearful of another stock market crash, remain reluctant to pile into UK shares.

There are a number of good reasons why you and I should expect another stock market crash. These include, but are by no means, exclusive to:

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  • Negative news flow concerning Covid-19. Market confidence has slumped in recent hours after President Trump declared that the coronavirus crisis could “get worse before it gets better.” Setbacks concerning development of a Covid-19 vaccine could also cause another market crash.
  • Growing signs of a no-deal Brexit. Many cyclical UK shares that are dependent on a strong domestic economy could be sold off sharply if a disorderly withdrawal from the European Union occurs. And the signs are so far not encouraging. The Telegraph reports that government ministers have all but abandoned hope of a deal being agreed.
  • Signs of deteriorating relations between the West and China. The frosty alliance between Washington and Beijing has been worsened by the Covid-19 crisis. Ongoing clashes between pro-democracy protestors and security services in Hong Kong have muddied the waters even further. Consequently, hopes of a long-lasting trade truce between the countries are looking shakier than they did at the end of 2019.

A stock price graph showing declines, possibly in FTSE 100

Playing stock market crashes

It’s understandable that investors remain nervous. But does the threat of a second market crash mean that you and I should stop buying UK shares? I certainly don’t think so. Instead, I reckon another market crash could provide a fresh opportunity to load up on brilliant stocks at rock-bottom prices.

Carrying out diligent research to find the best UK shares out there is critical. Timing your trades is another important part of building a winning stocks portfolio. Buying in at low prices allows you to maximise the returns you make on your purchases. And a stock market crash allows you to buy top quality stocks for next-to-nothing as panicked investors usually sell the cream of the crop along with the genuine duds.

A great time to buy UK shares

Indeed, there remain so many quality UK shares trading too cheaply following the stock market crash in March. We spend a lot of time here at The Motley Fool identifying these blue-chip bargains for you. And you’ll be able to pick them up at even lower prices in the event of another market crash.

It’s important to remember that share investors make their fortunes over a number of years. And that stock market crashes, while uncomfortable, only tend to have a superficial impact on long-term returns. This is why I plan to continue buying UK shares for my own personal ISA today.

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Royston Wild 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.

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