The Motley Fool

Have I missed the stock market rally?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

The stock market rally since last year’s Covid crash has been nothing short of stunning. The FTSE 100 is now back above 7,000, a rise of 40% since the market low on 23 March 2020, when the index dipped below 5,000.

During the crash, I wrote umpteen articles explaining why I was taking the opportunity to buy cheap shares. At The Motley Fool, we believe a market meltdown is an unmissable opportunity to pick up our favourite shares at knockdown prices. We then aim to hold them for the long term, to benefit from the ensuing stock market rally.

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...

We do that for two reasons. First, when markets fall, good companies are sold off with the bad. Second, history shows that share prices recover, if you give them time.

This stock market rally is breathtaking

I never buy shares with the aim of making a fast buck. My plan is to hold for a minimum of 10 years, to give them time to show their worth. Over such a lengthy period, even a major crash like last year’s can look like a blip. But if I’m buying a stock at a 30% discount, it should multiply my rewards during the stock market rally.

The question now is whether I have left it too late to buy more shares. Can this stock market rally continue? There’s a short answer. Nobody knows. It’s impossible for anyone to second-guess stock market movements, with any hope of consistent success. Nor can any computer. There are just too many variables.

Right now, I can see plenty of reasons why stock markets may continue to rally. We are only just coming out of lockdown. People have pent-up savings and want to spend them. Trillions of dollars in stimulus is washing around the global economy. Many stocks are still cheap.

Nobody knows what happens next

I can also see reasons why we might face a stock market crash, rather than a rally. Stock markets have priced in a rapid recovery, and some shares look overvalued. Many countries have yet to shake off Covid, and mutant variants could set back the global recovery. Inflation may take off, forcing central bankers to hike interest rates, and squeezing growth.

I can’t control where the stock market goes next, so I broadly ignore it. Instead, I focus my attention on hunting down the best stocks to buy for my portfolio. I favour companies with healthy balance sheets, minimal debt, loyal customers, and steady, rising profits.

I also check their valuations to make sure they are not too expensive. Then I prioritise companies with strong defensive moats that make it hard for competitors to steal market share.

I sometimes worry that the stock market rally has been overdone. That’s why I invest a regular monthly sum, to reduce the risk of buying at the very top. I also make the odd lump sum investment, when I have cash to spare or spot a good opportunity. There are still plenty out there.

Like this one.

Our 5 Top Shares for the New “Green Industrial Revolution"

It was released in November 2020, and make no mistake:

It’s happening.

The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

…That’s just here in Britain over the next 10 years.

Worldwide, the Green Industrial Revolution could be worth TRILLIONS.

It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!

Access this special "Green Industrial Revolution" presentation now

Harvey Jones 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

Renowned stock-picker Mark Rogers and his 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 click below to discover how you can take advantage of this.