Can the Current Stock Market Gains Really be Trusted?
There is a sense that this growth may not be sustainable in the long term. Is a crash around the corner? The massive gains we’ve seen this year certainly are encouraging. How can this be sustainable when the death toll from the Covid-19 pandemic is still growing, unemployment is rising and the economy is held in place by stimuli from the Federal Reserve, asks Motley Fool analyst Edward Ruger. So, could a market crash be near? Should you start selling in anticipation of that before the prices fall and you buy then? Logical reasoning would indicate that, but Ruger disagrees.
Analyst Evaluates What Buying and Holding Can Give You
You really can’t say for sure when exactly a crash would happen. It could be imminent, or still a few months and years down the line. But it wouldn’t be worth timing the market.
The market has experienced at least a 10% fall every 23 months in the past 70 years. Despite the inevitability of a stock market crash, Ruger reckons that buying and holding great stocks for a significant time horizon could give you growth. As a point to support that view, Ruger points out that the S&P 500 has averaged 10% per year in the past century.
Motley Fool contributor Sean Williams has a few stocks in mind to get a hold of.
Stocks to Consider During a Crash
These include telemedicine company Teladoc ($TDOC), telecommunications giant AT&T ($T), and card payment company Visa ($V). Are these stocks shielded from the effects of the crash? Well, Williams believes they can stay strong. Here's a bit of an insight.
A Telemedicine Stock
Teladoc Health belongs to the healthcare sector. The big advantage of the healthcare industry is that the demand for its products and services remains unaffected despite economic crises that could affect other industries. Health is vital, economic downturns don’t discourage people from staying healthy, so healthcare stocks may be worth holding on to in such situations.
Teladoc has particularly seen a significant rise in virtual health visits. Much of that can be attributed to the rise in Covid-19 cases because people don’t have to leave the comfort of their homes for a virtual consultation. But even before the pandemic, Teladoc’s revenue rose in 2019 to $553 million per year from 2013’s figure of just $20 million per year. This quarter that ended in June saw the company’s revenue soar to 2.8 million - a spectacular 203% growth. Currently, Teladoc is merging with Livongo Health ($LVGO) that provides applied health signals.
A Telecom Stock Also Into Content Streaming
AT&T is a telecom stock. The great thing about the telecom industry is that it offers the service of communication - something critical in times of crisis. And AT&T has its business model based on subscriptions, which may be favorable amidst a market crash.
Lastly, it’s also moving to 5G networks.; this 5G move could generate a tech upgrade cycle lasting for many years that would raise the demand for AT&T’s data component that typically offers high margins. Don’t forget, the company also has a content streaming business.
Credit Card Stock
Moving to Visa ($V), why would a card payment company be the preferred stock choice when the pandemic and the resultant job losses have forced people to tighten their purse strings? Well, firstly, let’s consider that online retail has increased in demand, and card payment has become one of the preferred means of payment.
Secondly, during the economic recession of 2009, Visa only experienced a single year-on-year decline. From 2009 to 2018, Visa saw its share of the credit card market in the US skyrocket in terms of purchase volume by over 9% to touch 53%. Its purchase volume during the period also rose by more than double to $1.96 trillion from $764 billion. The company has become the preferred choice for payment processing in the United States, and that says a lot.
So, is a market crash around the corner? No one can pinpoint when a market crash will take place. However, make informed trading decisions using advanced stock market trading software to help you retain the best results.
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