The stock market crash has taken down many shares in the FTSE 100. And, although uncertainty fills the air, I reckon many of these great companies will survive the crisis and thrive afterwards.
Indeed, looking back from five or 10 years into the future, I’m sure we’ll recognise many stocks today as selling at bargain prices. I’d buy some of them now and hold for the long term.
FTSE 100 bargains
For example, plumbing and heating products supplier Ferguson is still trading and will be poised to spring back to full speed as soon as the crisis abates. Likewise, British American Tobacco will be unlikely to see much of a dent in its revenue because of coronavirus.
Meanwhile, housebuilder Persimmon has experienced significant disruption to its business. But the firm’s cash-flush balance sheet will likely see it through. When the crisis is over, the company will probably resume brisk and profitable trading.
However, to make the most of the crisis and to maximise the potential for future gains from FTSE 100 shares, we need to act when the outlook remains murky. The stock market tends to look ahead. So, by the time everything looks rosy again, shares have often bounced back up.
I watched a recent interview featuring an unruffled Warren Buffett. Just like everyone else, he doesn’t know where this crisis is going. But he reckons he expected it. Not this crisis exactly, but a crisis. They’ve happened periodically throughout all the decades he’s been investing, he said. And it hasn’t stopped him making billions from the markets.
Interestingly, Buffett reckons he had ‘pandemic’ written down on his list of possible setbacks. And that’s unsurprising considering we’ve seen the likes of the coronavirus crisis before. I watched an interesting docu-drama recently about the 1918 flu pandemic. My impression was that it was far worse in its effects than today’s crisis. Many millions more died, for example, and it flared up towards the end of the first world war.
Markets will recover
Yet despite heaping misfortune and misery upon misfortune and misery, the world recovered from the flu pandemic of the early twentieth century. Not only did the economies of the world survive, but they also went on to thrive and grow. And Buffett makes the point in the interview I watched that periodic set-backs have never stopped massive economic and technological progress before. And this crisis will be unlikely to stop future progress.
For me, Buffett’s message is clear. I think now is a great time to sift through lists of fallen FTSE 100 shares to identify the strongest players. I’ve mentioned three examples above, but there are many that attract me as well.
Now is the time to build up your watch list and drill down into the opportunities available in the markets with a healthy dose of Doing Your Own Research. Good luck in the markets!