Why I won’t forget the 2020 market crash when buying stocks in 2021

first_img FREE REPORT: Why this £5 stock could be set to surge See all posts by Peter Stephens Get the full details on this £5 stock now – while your report is free. Why I won’t forget the 2020 market crash when buying stocks in 2021 Peter Stephens | Wednesday, 3rd February, 2021 Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. 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. Image source: Getty Images. 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. Our 6 ‘Best Buys Now’ Shares Enter Your Email Address Simply click below to discover how you can take advantage of this. The 2020 market crash caused a wide range of shares to experience major price declines. For example, the S&P 500 declined by a third in a matter of weeks as investors began to price in a weaker economic outlook.Even though there’s been a stock market rally since then, the crash acts as a reminder that the stock market can be hugely unpredictable and very volatile.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…Therefore, buying financially-sound businesses and diversifying in 2021 could be a sound move that lowers risks during what remains a very uncertain economic situation.The ongoing potential for a market crashThe 2020 market crash occurred in a shorter amount of time than previous bear markets. But it wasn’t an unprecedented event in terms of share prices falling heavily in a matter of weeks. For example, there have been previous rapid declines in the stock market, notably in the dot com bubble and the global financial crisis.Predicting such events is almost impossible. Therefore, they could occur at any time without any prior warning. The economic outlook remains very uncertain at the present time. So there may even be a higher chance of a market decline in the coming months. While this may or may not take place, being ready for it at all times could be a means of reducing risk and capitalising on a possible recovery in its wake.Buying financially-sound businessesEven though most shares fell heavily in the 2020 market crash, buying financially-sound businesses could be a shrewd move. The stock market declined partly because of a weaker economic outlook caused by coronavirus. As such, it could have a larger negative impact on companies with weak balance sheets that contain large amounts of debt. They may be less able to service their debt should sales fall than a company that has lower leverage.Of course, buying even the most financially-stable business will not make any investor immune from a stock market fall. However, it can mean their holdings have a higher chance of still being in existence. And that also means they can benefit from a potential market recovery as the economic outlook improves and investor sentiment strengthens.Building a portfolio for 2021The 2020 market crash also showed that some sectors can be worse affected than others by a downturn. For example, at the present time industries such as financial services and resources are underperforming many of their index peers due to relatively weak operating conditions.As such, owning a variety of companies that operate in a broad range of industries could be a shrewd move. This strategy won’t eliminate risk entirely. However, it could reduce overall risks during the course of 2021 and in the coming years. Especially with the economic and stock market outlook continuing to be very unpredictable because of the ongoing pandemic.last_img read more

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