Still, as billionaire investor Warren Buffett has long said, it can pay to be fearful when others are greedy – and greedy when they are fearful.

With fear in the market right now, could this be the time to be greedy?

This market still looks high to me

Yes and no, would be my answer.

Let’s start with the idea of not being greedy right now.

There is a lot of fear in the stock market – and for good reason. The market does not like uncertainty – and there is plenty of that to go around right now.

However, we had already seen the FTSE 100 hit a new all-time high on multiple occasions this year. It is now down 9% since the end of last month, putting it close to correction territory (a fall of at least 10% in short order), but still well short of a crash.

Yet the FTSE 100 is still slightly above the level at which it began the year.

The FTSE 250 is faring worse, but is only 5% lower than the start of the year. Stateside, the S&P 500 is down 4% so far this year.

In other words, although the market has a smell of growing fearfulness, it is actually not doing as badly as one might expect given current risks and uncertainty levels.

So it feels as if we are seeing a wobble, but not yet mass panic selling (and that may not end up happening at all).

I reckon that the main stock indexes could potentially yet sink a lot further simply to reflect current risks more fully, let alone any worsening of the economic outlook.

There could be bargains here, though

Still, might there be some reasons for an investor to be greedy? I think so.

Volatile markets often mark down some shares more than they deserve, as investors are jittery. So, already, I think the current market offers some potential bargains.

For example, the share price of footwear maker Crocs (NASDAQ: CROX) has collapsed 24% in little over a month.

That puts the share in crash territory, as a crash is commonly used to describe a short-term price fall of 20% or more.

Rising oil prices could add costs to the manufacturing price of Crocs’s footwear made using synthetic products. Snarled shipping lanes could add to logistics costs and mean the import-reliant company needs to tie up more working capital in inventory.

Meanwhile, the company has continued to struggle with the performance of HEYDUDE, after it bought the brand in what I regard as a disastrous acquisition back in 2021.

But has the underlying value of the company really collapsed?

I do not think so.

Crocs’ design is iconic. It has excellent operational capabilities. The brand, while often mocked, is pervasive and well-known.

The company expects revenue this year to be more or less flat, while double-digit percentage revenue growth for the Crocs brand internationally points to the size of the ongoing growth opportunity.

I plan to hang onto my Crocs shares. At the current price, I see it as a share for a long- term investor to consider.

The post The stock market’s fearful. Is it time to be greedy? appeared first on The Motley Fool UK.

But it comes with limitations that do not apply to a ISA, specifically, that once money is put into it basically cannot be taken out again until the person reaches a specified age.

That makes a SIPP considerably less flexible than a Stocks and Shares ISA, which allows money to be taken out at any point.

So, why might someone bother using a SIPP at all?

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Discipline to help investors act for the long term

One reason is actually precisely because the money is locked up.

Life can throw up unexpected expenses. For most of us, there will be times when it would be handy to be able to access some money we have that is tied up. That might be in a SIPP, but it could be in lots of other places, such as a property or in a savings bond.

That very temptation helps explain why the SIPP is structured as it is. It is specifically designed to impose a discipline on people, reducing their opportunity to spend their pension before they reach the age they may need it as a pension, rather than for general living expenses.

A SIPP can offer sizeable tax rebates

Another big reason is the potential tax benefits.

A SIPP offer tax-free capital gains and income growth inside its wrapper. So for someone who has maxed out their annual ISA contribution allowance, it could be another avenue for tax-efficient investing.

But while an ISA helps wrap money inside a tax wrapper, a SIPP goes one better.

Contributions receive tax relief. Even at the standard rate of 20%, that is a significant factor to consider. For higher and additional rate taxpayers, the rebate offered by a SIPP can be greater still.

One share I own in my SIPP

One of the shares in my own SIPP is Crocs (NASDAQ: CROX). So far it has been disappointing and unfortunately I am not convinced that will change any time soon.

The company has been hit by tariff disputes due to its international manufacturing footprint. But a thornier challenge has been its acquisition of another brand a few years ago at what I saw as a high price. As I see it, that brand lacks the simplicity and uniqueness of the core Crocs range of shoes.

Management has been trying to get the business back on the front foot, but meanwhile Crocs shares have not met my expectations.

But I am a long-term investor and, as I see it, the long-term investment case for the utilitarian yet iconic footwear brand remains appealing.

Its shoes are cheap to make, the basic design lends itself to large numbers of tweaks to help keep things fresh and the brand itself has built a strong market niche.

I am not expecting an overnight miracle. But I have no plans to dump my Crocs shares from my SIPP. I am hoping that the investment will do well in years to come.

The post Is it worth bothering with a SIPP instead of just using an ISA? appeared first on The Motley Fool UK.

Billionaire investor Warren Buffett has had his fair share of rough markets to contend with over the decades. Here are three of his practical thoughts about investing when markets are volatile.

Understand what you’re investing in

A classic sign of a market bubble is when hordes of people put money into a share just because it has strong positive momentum, with no understanding of what the business is.

Buffett sees a share as a stake in a business. When investing, rather than looking at a chart and trying to discern a pattern in it, he considers whether he would like to own the whole business and if so, what would be an attractive price for an individual share.

Taking such an approach involves understanding a business, assessing its financial prospects and having a point of view on what a fair valuation would be.

If Buffett does not feel he understands a business, he will not invest in it.

Don’t be unnecessarily alarmed by price swings

Given that approach to investing, Buffett does not worry too much if a share he owns goes down in value. After all, he is investing for the long term. So the swings of the stock market – even significant market volatility – need not bother him if he is not planning to sell those shares.

However, that does not mean he pays no attention to what is going on in the stock market. After all, turbulent stock markets can throw up the opportunity to buy into great businesses at much lower prices than just a short time before. That is exactly what Buffett did during the 2008 financial crisis.

Take the long-term view

In a rough market, it can seem as if things may never be the same again. In such a situation, taking a long-term approach to investing can be not only potentially rewarding, but also reassuring.

For example, I have hung onto my shares in well-known footwear maker Crocs (NASDAQ: CROX). So far, they have been a crushing disappointment. Tariff concerns have played havoc with investor sentiment. Actual tariffs have hurt the company’s business model.

Weak consumer sentiment in the US and exchange rate fluctuations are only some of the other risks that mean that this has been a pretty rough year so far to be a Crocs shareholder. The share price is down 29% so far in 2025.

But I have hung on because, over the long term, I continue to like the business. It has a lot of what Buffett looks for when investing, as it happens: scale, a proven business model, an easy to understand business, and strong branding.

Will it come good? I hope so and have no plans to sell my shares. Meanwhile, I am taking a long-term view and ignoring the short-term share price movements. Over a five-year timespan, the Crocs share price has risen 34%.

The post 3 Warren Buffett approaches I use to invest during market volatility appeared first on The Motley Fool UK.

His company Berkshire Hathaway announced over the weekend that it had written down the value of its investment a decade ago in Kraft Heinz by $3.8bn.

That sounds like a very costly mistake. In reality, the picture is a bit more complicated. Berkshire has received over $6bn in dividends since investing in Kraft Heinz, for example.

Still, investing in the baked beans giant was not one of the best moves Warren Buffet has made, by a long shot.

Admitting mistakes can be painful but powerful

In fact, something that sets Buffett apart from many investors is his willingness to admit – both to himself and publicly – what he sees as his mistakes. That can make him a better investor, in my view, despite the potential for embarrassment.

In his 2007 shareholders’ letter, Buffett helpfully distinguished between what he described as mistakes of omission (great deals he let slip through his fingers) and those of commission (bad deals he made).

One bad mistake of commission he highlighted was buying shoe business Dexter in 1993 for $433 million in Berkshire stock.

Warren Buffett looked back on that like this: What I had assessed as durable competitive advantage vanished within a few years. But that’s just the beginning: By using Berkshire stock, I compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business – one now valued at $220 billion – to buy a worthless business.“

The difference between paying for a deal in stock and in cash is one I pay attention to when businesses in which I own a stake make a takeover bid. I do not see one approach as necessarily better than the other – the question, as Buffett points out, is what is a company giving away and what does it get in return?

Looking for a moat

I also find interesting Buffett’s observation that a key problem here was the fairly quick disappearance of what he had seen as a durable competitive advantage. He sometimes refers to that as a “moat”.

Dexter lost its competitive advantage as overseas factories undercut US manufacturing costs significantly. That got me thinking about a US footwear stock I currently own: Crocs (NASDAQ: CROX).

It has long since learned how to manage a complex global supply chain in a way that Dexter never did. Then again, tariffs and rising international freight costs are both potential risks that arise from such a supply chain in 2025.

Does Crocs have a moat that puts clear blue water between it and rivals, though? While plastic sandals may seem generic, in fact Crocs’ patented clog design is a strong competitive advantage, in my opinion.

It has also used its vast scale to figure out how to optimise its manufacturing strategy in a way that enables it to keep costs low enough to make the brand accessible for consumers, but still pricey enough to turn a handy profit.

I do think Crocs has a durable competitive advantage and have no plans to sell my shares. Still, Warren Buffett once thought that about Dexter!

The post Even Warren Buffett makes investing mistakes. Here’s what sets him apart from many investors! appeared first on The Motley Fool UK.

Seeing a dramatic swing in share prices can feel unsettling.

Here are two things I think investors could do well to bear in mind.

A paper loss is just a paper loss

When stock prices fall and the valuation of an ISA or portfolio goes down, it can make for a sobering read.

Suddenly a valuation readout may be noticeably lower than it was before.

But an investor does not make a capital loss (or gain) on an investment until they sell it. For many investors there is no obligation to do that – or anything. They can simply sit on their hands and wait.

As a long-term investor, when the price of a share I own changes but its investment case does not, I will often simply hang on to it and ignore the short-term market noise.

Meanwhile, for income shares I own, dividends will hopefully keep piling up!

A stock market tumble can offer a great buying opportunity

If I have spare cash on hand to invest, a sudden drop in price may offer me the opportunity to load up on a share I want to own at a more attractive price than just days before.

For example, I own shares in US-listed shoemaker Crocs (NASDAQ: CROX).

They ended yesterday down 14%. That sort of share price fall in a short time is known as a correction. At one point during the day’s trading, however, they had fallen over 20% in a matter of hours. That level of decline in a short time, if seen across the wider market, is a crash.

It remains to be seen whether the US is headed for a full-on stock market crash in coming weeks following yesterday’s dramatic trading day.

But what is clear is that buying more Crocs shares yesterday would have been a lot cheaper than the same trade just one day before.

As a global company with complex international supply chains, additional costs could eat into Crocs’ profitability.

I reckon the same thing is also true of competitors in the company’s key US market, though. People will still need to buy footwear, so companies like Crocs could likely shift higher costs to consumers in the form of increased retail prices.

Meanwhile, the stock sells on a price-to-earnings ratio of just 6, despite having a hugely popular brand, proven business model and being highly cash generative.

I like Crocs shares so much I already own quite a few, so to keep my portfolio diversified I decided not to scoop up more at a lower price this week.

But I was sorely tempted! Amid market turbulence I will keep looking for other such potential bargains…

The post 2 things to remember when stock markets are turbulent appeared first on The Motley Fool UK.

Not only does that involve little real work, it can also be lucrative. Step by step, here is how an investor could use that strategy to target £10K in passive income each year.

A lump sum is one way – but it’s not necessary

The dividend income will depend on how much is invested and what the average dividend yield is.

For example, using a 5% dividend yield, £10K in second income annually would require a £200K investment.

But an alternative method (and the one I use) is to try and build up to the income target over time by making regular contributions to an ISA.

Even £200 per week compounded at 5% annually could lead to a £200k portfolio. Sure, it would take 14 years. But as a long-term investor, that is music to my ears.

Finding shares to buy

An investor could also speed things up if the compound annual growth rate (i.e. share price movement plus any dividends) was higher than 5%. But dividends are never guaranteed – and share prices can go down as well as up.

So I never choose a share just because of its yield.

Rather, I try and find great companies I think have excellent long-term commercial prospects that in my opinion are not properly reflected in their current share price.

A short case study

That sounds well in theory, but what about the practice?

Let me illustrate with a share I own: footwear specialist Crocs (NASDAQ: CROX). Over the past five years, the Crocs share price has soared 149%: far, far above my 5% per year example.

I have missed that gain, as I am a fairly new shareholder. Fine. The thing is, even now, the company trades on a price-to-earnings ratio of just 7.

That seems almost absurdly cheap to me given the iconic brand and product, huge customer base, manufacturing management expertise and patented designs. I do not like Crocs — but I recognise a great business model when I see one.

Still, if the business is so good, why is it selling at that price – and why is it down 36% since June?

Its acquisition of the Hey Dude footwear brand has brought a host of problems and looks like increasingly bad value.

That is a risk to earnings. But I still think Crocs is a great business at a great price and plan to hold the shares.

Getting ready to invest

But wait. Crocs does not pay a dividend. So where would a second income come from in such a scenario?

Recall above I talked about a £200K portfolio invested at a 5% yield. If not starting with a lump sum, the investor does not need to invest in dividend shares immediately.

They can use a mixture of dividend and growth shares to build their portfolio value. Then, at the £200K mark, they could switch to just dividend shares.

If the investor diversifies and chooses the right shares, hopefully that £10K second income will keep coming (and maybe even growing) each year.

But they need a good way to buy and hold those shares, such as a Stocks and Shares ISA.

The post Here’s how much an investor would need in an ISA to earn a £10,000 second income this year (and every year!) appeared first on The Motley Fool UK.

I will continue to do that in 2025. Here’s how.

Step one: getting clear about value

First things first. What exactly is a bargain?

Maybe I could buy a share for less than its assets are worth. That is the approach taken by Warren Buffett early in his career. Surprising though it may seem, some shares trade for less than their assets are worth even now. In fact, when investors talk about investment trusts trading at a discount to net asset value, that is exactly what they are referring to.

But I would prefer to find shares to buy that are a bargain compared to what I expect them to be worth in the long term.

Step two: finding brilliant businesses

So I look for companies I think have a sustainable competitive advantage in a field I expect to see high demand over the long run.

There are thousands of companies listed on the UK and US stock markets. Most I do not understand – and in many cases, I do not even properly understand the business area they are in.

So, I stick to my “circle of competence“, as Buffett refers to it, and focus on businesses I reckon I can get to grips with.

Step three: spotting a valuation gap in my favour

However, even a brilliant business can make a lousy investment. If I overpay for a share relative to its intrinsic value, I could be in the situation where my shareholding is worth less than I paid for it even as the company continues to grow profits.

So I look for situations to buy shares at significantly less than I think they are worth.

Sometimes I get it wrong. For example, a price crash following a profit warning can sometimes seem like a buying opportunity, but later turns out to be a harbinger of a company in trouble. What looks like a bargain can be a value trap.

So I focus on businesses with proven business models that I think have strong long-term prospects.

Putting the theory into practice

As an example, this year I have invested in Crocs (NASDAQ: CROX).

After soaring 162% in five years, it might seem that Crocs is anything but a bargain. In fact, though, the share trades on a price-to-earnings ratio of under eight.

The footwear market is here for the long run, if you’ll excuse the pun. Crocs has a strong brand, distinctive design, and competitive manufacturing costs. By expanding its range, it has hopefully overcome what I see as a key risk, that its shoes will fall out of favour with buyers as the fickle winds of fashion blow.

Risks remain that help explain the cheap price, such as ongoing sales challenges for the company’s Heydude brand.

But when looking for shares to buy, my focus is on the long-term potential not short-term sales trends. I will continue to apply that approach as I scour the market for bargains heading into 2025.

The post Here’s how I’m finding bargain shares to buy for 2025! appeared first on The Motley Fool UK.

Crocs

What it does: Crocs is the owner and distributor of footwear sold internationally under brands including Crocs and HeyDude.

By Christopher Ruane. I do not like Crocs (NASDAQ: CROX) shoes. But I do like the business.

Last year the iconic footwear firm saw revenues climb 14% while net income surged 46% to $793m. The current market capitalisation of $9bn makes the shares look cheap in my opinion.

The business benefits from strong international revenue growth (24% in the first quarter), positive momentum for the Crocs brand and increasing sales in other product lines such as HeyDude. I think there could be more value in this company than the current share price suggests.

Generic rivals to its core range of simple footwear is an ongoing risk to sales and profits. A weak retail environment in the US market could also hurt demand.

But Crocs is highly profitable and has a well-established business I think could keep growing. It is paying down debt and I expect it to continue buying back shares this year.

Christopher Ruane owns shares in Crocs.

Joby Aviation

What it does: Joby Aviation is an electric vertical take-off and landing (eVTOL) aircraft company building an air taxi service.

By Ben McPoland. I recently bought a few more shares of Joby Aviation (NYSE: JOBY). The Toyota-backed firm has built an electric air taxi designed to carry a pilot and four passengers. These eVTOLs fly at speeds of up to 200 mph and are near-silent, meaning there’s far less pollution and noise.

It plans to begin its ride-hailing service next year, initially in New York and Los Angeles. With partners Delta Air lines and Uber, it aims to reduce commutes between John F. Kennedy Airport and nearby areas from 1 hour to 7 minutes.

It has also signed an exclusive agreement to provide air taxi services in Dubai and sell aircraft to Mukamalah, the aviation arm of Saudi Aramco, which will introduce eVTOL aircraft to Saudi Arabia. Joby also delivered the first ever electric air taxi to the US Department of Defence last year. 

Now, this is a high-risk stock because the innovative company is pre-revenue and still has to get the final sign-off from regulators to begin commercial operations. Perhaps there will be delays. But the firm remains well-capitalised, with $924m in cash on the balance sheet at the end of March.

Ben McPoland owns shares in Joby Aviation.   

Realty Income

What it does: Realty Income is a US real estate investment trust that leases a portfolio of retail properties.

By Stephen Wright. I’ve been buying shares in Realty Income (NYSE:O) recently. The company has an outstanding track record of dividend increases and I think it can be a good source of income going forward.

The current dividend yield is 6%. That’s high compared to where it has been over the last decade and I think there’s a real opportunity at the moment.

Things have been tough in the industry lately. And the latest news is that Walgreens Boots Alliance – one of the companies biggest tenants – is planning on closing some of its stores.

Walgreens might be one of Realty Income’s largest tenants, but it only accounts for around 2.5% of the total rent. As a result, the impact on the overall portfolio should be limited.

That’s the benefit of leasing to a diversified tenant base. It makes the company resilient and puts it in a good position to keep increasing its dividend going forward.

Stephen Wright owns shares in Realty Income.

Unilever

What it does: Unilever is a multinational consumer goods company. It has over 400 brands, including 30 Power Brands.

By Charlie Keough. I snapped up some shares in FTSE 100 giant Unilever (LSE: ULVR) last month. There are a few reasons why.

Firstly, I want to bulk out my portfolio with defensive stocks. I want the majority of my holdings to be companies that have the potential to provide steady returns over the long run. Unilever fits the bill.

I also think the stock looks like decent value at the moment, trading on 20.2 times earnings and below its historical average.

Then there’s its dividend yield. At 3.4%, it’s far from the highest in my portfolio. But it’s reliable. And to me, that’s incredibly important.

The risks are that Unilever tends to sell higher-end goods, which come at a price. Therefore, during a cost-of-living crisis, there’s the ongoing threat that consumers switch to cheaper non-branded alternatives.

But Unilever has strong branding and this gives it an edge. This showed in its latest results, where for the first quarter the business posted 4.4% underlying sales growth and 2.2% underlying volume growth.

Charlie Keough owns shares in Unilever.

Vesuvius

What it does: Vesuvius is a market leader in metal flow engineering, providing solutions to handle molten metal in iron and steel foundries.

By Roland Head. I added FTSE 250 member Vesuvius (LSE: VSVS) to my portfolio recently. In my view, this 108-year-old business looks decent value right now.

In a trading update in May, CEO Patrick André confirmed that he expected 2024 results to be in line with existing expectations.

Broker forecasts suggest profits are expected to return to modest growth in 2024, after last year’s decline. City analysts are predicting stronger earnings growth in 2025.

The big risk here is the company’s cyclical exposure. Demand for Vesuvius’s services is linked global construction and industrial activity. If this slows in major markets such as the USA or India, results could disappoint.

Personally, I think a cautious outlook is already priced in. I bought the shares on less than 10 times 2024 forecast earnings, with a well-supported 5.2% dividend yield.

At this level, I’m happy to collect the income and wait for market conditions to improve.

Roland Head owns shares in Vesuvius.

Xtrackers MSCI World Momentum UCITS ETF

What it does: Xtrackers MSCI World Momentum UCITS ETF invests in global shares that exhibit strong price momentum.

By Royston Wild. I’ve been seeking ways to diversify my portfolio in recent months. I’ve been looking for ways to manage risk and to grab a slice of some exciting investment opportunities.

Xtrackers MSCI World Momentum UCITS ETF (LSE:XDEM) is an exchange-traded fund (or ETF) I feel enables me to do this effectively. It holds shares in almost 350 different companies.

The fund is focused on the US — as I type, a whopping 68.5% of its capital is tied into New York-listed companies. Its five largest holdings are Nvidia, Meta, Amazon, Broadcom and Eli Lilly.

But as its name implies, it also takes a pan-global approach and has holdings in Japanese, German, Dutch and Danish stocks, among others. It also offers exposure to many sectors like semiconductors, software, banks and mining, providing my portfolio with added diversification.

As you can see, this Xtrackers product is highly exposed to several cyclical sectors. So if interest rates remain high, I could endure disappointing returns in the near term.

But over time, I think the fund could be an effective way to hit my investment goals.

Royston Wild owns Xtrackers MSCI World Momentum UCITS ETF.

The post 6 stocks that Fools have been buying! appeared first on The Motley Fool UK.

What’s causing the growth?

There are a number of factors that have contributed to Crocs’ strong performance. First, the company has benefited from the growing popularity of its shoes. Crocs are known for their comfort and versatility, and they have become increasingly popular as a fashion statement. In 2022, Crocs’ net sales increased by 61.1% to $945.2 million. This growth was driven by strong demand for the company’s clogs, sandals, and Jibbitz charms.

Crocs has recently expanded its product line to include a wider variety of shoes, including sandals, boots, and clogs. This has helped the company to appeal to a wider range of consumers. In 2022, Crocs launched a new line of kids’ shoes, as well as a line of shoes for nurses and medical professionals.

Crocs has been extremely aggressive in its international expansion. The company now sells its shoes in over 90 countries, and it is growing its presence in emerging markets. In 2022, Crocs’ international sales increased by 82.2%

How are the fundamentals?

The fundamentals of the company also look to be improving steadily. Crocs has a strong balance sheet with a significant cash balance. The company also has a low debt-to-equity ratio, which makes it less risky for investors. Crocs has a experienced and capable management team that has a proven track record of success.

A discounted cash flow calculation suggests the shares may be 67% undervalued at present, with a calculated fair value of $303.56.

Will the growth continue?

Analysts are expecting continued growth in the earnings of the company, forecasting 11% in the next five years. However, there are also some notable risks to consider before investing in the shares. One risk is that the company’s popularity could fade. Crocs have been criticised for their ugly appearance, and they are not as fashionable as some other brands of shoes. If the trend wears off, the stock could decline in value.

Another risk is that Crocs could face increased competition. There are a number of other companies that are making comfortable and versatile shoes, and these companies could start to take market share. If Crocs’ competitive advantage erodes, the share price could suffer. However, the company has a number of competitive advantages, such as strong brand recognition, a unique product, and global reach.

One red flag I see in the company concerns inside selling from the management team. In the last year, the company’s executives sold over $10m in shares. This may be entirely unrelated to expectations of the company’s performance, but does not inspire confidence for current or new investors.

Am I buying Crocs shares?

Overall, Crocs is a well-positioned company with a strong track record of growth. Crocs shares have been supported by growth in both the business fundamentals, and in an rise in product popularity. With company fundamentals steadily improving, and the Crocs shares appearing to be undervalued at current prices, I am looking to buy shares in the next few months.

The post Should I consider snapping up Crocs shares? appeared first on The Motley Fool UK.