市场见解

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

The speed and scale of the 2020 market crash provides an ongoing reminder to buy financially-sound businesses in 2021, in my opinion.
The post Why I won’t forget the 2020 market crash when buying stocks in 2021 appeared first on The Motley Fool Australia. –

Investment Lesson

The 2020 market crash caused a wide range of shares to experience major price declines. For example, the S&P 500 Index (INDEXSP: .INX) declined by a third in a matter of weeks as investors began to price in a weaker economic outlook.

Even though there has been a stock market rally since then, the crash acts as a reminder that the stock market can be hugely unpredictable and very volatile.

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 crash

Even though the 2020 market crash occurred in a shorter amount of time than previous bear markets, it was not 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. With the economic outlook being very uncertain at the present time, 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 businesses

Even 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 to benefit from a potential market recovery as the economic outlook improves and investor sentiment strengthens.

Building a portfolio for 2021

The 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 will not eliminate risk entirely. However, it could reduce overall risks during the course of 2021 and in the coming years, with the economic and stock market outlook continuing to be very unpredictable because of the ongoing pandemic.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why I won’t forget the 2020 market crash when buying stocks in 2021 appeared first on The Motley Fool Australia.

随时随地,交易世界!

移动APP平台,拥有 12 个市场的 50,000 多种全球上市证券(全球市值超过 70%),直接在您的 Android 或 iOS 设备上即可操作。

与独有的交易理念和投资分析工具相结合,帮助您在我们 12 个全球市场中的几乎所有金融工具上找到可操作的见解,从而帮助您优化交易策略。

推荐给您的朋友

向您的朋友推荐Monex并赠予他们免费使用我们交易工具的机会

我们尊重您的隐私,只会向您的朋友发送一封邮件 

与您的朋友分享

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!