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Have I left it too late to profit from the stock market recovery?

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One English pound placed on a graph to represent an economic down turn
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As the FTSE 100 powers past 7,000, I’m wondering how much further the stock market recovery has to run. The index is up 40% since slipping below 5,000 in March last year, but has been idling lately.

Can the FTSE 100 press even higher, to 7,500 or even 8,000? It absolutely could, given the UK’s relative vaccine success. Or could it crash back down to 6,500, or even 6,000? That’s also possible, given mutant Covid threats.

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That’s the problem with second-guessing the stock market. Nobody can say for sure whether a recovery can continue, or what will trigger the next crash. There are simply too many variables. So what should I do?

I can’t second-guess this stock market recovery

The first step is to remember what ace investor Warren Buffett has taught us. Don’t predict the market! Or as he put it: “A prediction about the direction of the stock market tells you nothing about where stocks are headed, but a whole lot about the person doing the predicting.” So what can I do?

When deciding whether to invest in UK shares, it’s the underlying company that matters. Does it have solid, growing revenues? A healthy balance sheet? Good management? Loyal customers? High entry barriers for rivals?

I can’t gauge whether today’s stock market recovery will continue, but I can do my best to work out which stocks are well-placed to increase their profits if it does, or will prove resilient if it crashes.

Lately, I have been steering clear of the riskier recovery stocks, such as cinema chains and travel companies. I know they’ve done well lately, but I also think they’re vulnerable to another stock market crash. Recent government flip-flopping over travel restrictions has increased my unease. The easyJet share price fell 5% yesterday after ministers reversed their decision to green list Portugal.

Today, I’m focusing on companies that have shown resilience throughout the last crazy year. I admire Legal & General Group for standing by its generous dividend. I’d also buy grocery chain Tesco, which also offers a steady, solid yield.

I’d buy these FTSE 100 stocks in any weather

Business support specialist Bunzl, pharmaceutical giants and income hero GlaxoSmithKline, clothing retailer Next, and future renewables giant SSE are just some of the companies I’d consider buying today.

I might also build a position in long-term favourites such as spirits giant Diageo and household goods supplier Unilever. I’d also add asset manager M&G and global mining giant Rio Tinto to my watch list, as they offer incredible yields of 7.34% and 5.33% respectively. By investing in a balanced spread of shares I don’t have to worry whether the stock market recovery will continue, pause, or reverse.

Even a crash doesn’t worry me toon much. History shows that stock markets should always rebound, given time. I’d simply take the opportunity to snap up more stock at a lower price. Then when the next leg of the stock market recovery hopefully arrives, I should reap the benefits.

I'd also consider this.

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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.

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