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Here’s how I’m planning for a second stock market crash

first_img Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” 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. Here’s how I’m planning for a second stock market crash I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Simply click below to discover how you can take advantage of this. The possibility of a second stock market crash in 2020 hasn’t gone away. And I can understand how the threat of another crash makes people nervous about investing in the stock market.A second stock market crash could be an opportunityBut some of the best share bargains arrive in times of uncertainty. Indeed, famous US investor Warren Buffett has achieved extraordinary returns by buying the stocks of strong underlying businesses when they are out of favour with investors.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…The second part of Buffett’s strategy involves holding onto his shares for a long time. And that means riding the ups and downs of the market, including any further stock market crash that may arrive in 2020. The idea is to hold until you realise the full potential of the underlying enterprise. Often, growth and operational progress will cause the share price to rise. It could also fuel a growing stream of shareholder dividends.But Buffett isn’t the only investor to pursue such a strategy. Early on, growth investor Philip Fisher influenced Buffett to adopt a long-term perspective. And his ‘partner’ Charlie Munger also helped persuade him to hold quality shares for a long time. Indeed, Buffett’s earlier strategy involved focusing on cheap, undervalued businesses and buying their shares for a relatively quick bounce-back gain. Often, the quality of the underlying business was lacking. So those stocks weren’t suitable for a long-term hold.Impressive returnsMost of Buffett’s billions have come from the long-term, quality business strategy that he follows now. And many have copied his approach. For example, I recently wrote about Nick Train of fund management company Lindsell Train. His technique chimes with Buffett’s because he holds the shares of quality businesses through “thick and thin.” And, over the past 20 years, Train’s performance has been impressive. He’s delivered his fund investors returns measured in hundreds of per cent.One thing that both Buffett and Train didn’t do was to sell any of their quality shares when the stock market crash arrived in the spring. Although, in fairness, Buffett did sell his holdings in the airlines. But an airline isn’t a high-quality business. Buffett himself had been telling us that for years.So central to my plan for handling a second stock market crash is to make sure strong, high-quality businesses back the shares I’m holding now. Indeed, if there’s anything in my portfolio that doesn’t attract my full conviction, now’s the time to chuck it out.Step two of the plan is to focus on a long-term investment period. If I aim to hold my shares for 20 years, say, another crash in 2020 will become a short-term setback.The final step is to prepare a watch list now of quality shares I’d like to own one day. Then, if a second crash does arrive, I can potentially buy some of those quality shares while the market is marking them down to a lower price. Kevin Godbold has no position in any share 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.center_img Our 6 ‘Best Buys Now’ Shares Image source: Getty Images Kevin Godbold | Wednesday, 19th August, 2020 Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! 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. See all posts by Kevin Godboldlast_img read more

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