Stock Market Crash Investing

Stock Market Bottom – Best Stocks to Buy

Pre-Crash Stock Investing

Being a future-oriented market blog, we must explore investing opportunities coming down the pike. This includes the opportunity to wait to use your cash to buy great stocks when the market hits bottom. Buy low, sell high.

Of course the stock markets have plunged in 2022, with steeper drops of late, but the fall presents a scarier time, with much higher, and rising interest rates. It looks the recession has begun, and we still have to wait for the markets to bottom.  My guess is February, 2023.

Pundits predicted it would hit bottom on August, but that isn’t the case. The NASDAQ, Dow Jones and S&P all dropped to mid summer lows today, and are certain to go lower. When earnings reports come in, it will lead to another market sell off.  The Fed will raise rates again next month after seeing the Sept inflation rate.

See more on the general stock market forecast, the 3 month predictions, 6 month predictions, and the 5 year outlook.  If you’re an average investor, it might be wise to buy the dip, and hang on for another 5 years. Some call this opportunity the chance of a lifetime, so take it seriously.

High inflation, high dollar, high Fed rate, and energy prices to Rise

This isn’t to say a stock market crash is imminent, but with the Fed pushing rates up at record speed, while not really containing inflation yet, we can expect 2023 to be a troubled year for equities. Bonds and treasuries on the other hand are headed toward record yields.  The Fed rate will rise, mortgage rates will rise, and taxes will be next unless the GOP wins the Senate and House in November.

Most experts advise not to pick stocks right now.  Maybe not bonds either. However, studying the S&P sectors, and researching viable companies who will still exist past the 2023 recession, is wise.

Definitely review the stocks listed below.

Best Performing Stocks September

Do these performing stocks during the high inflation era matter now? They’ve got momentum, particularly since the performance in the last month is solid.

Best performing stocks 2022. Screenshot courtesy of Barchart.

When Will the Stock Market Hit Bottom?

No one really knows when the stock market will bottom out.  The smart investor is waiting patiently for all the folly to end, markets drop, when the Fed stops raising the cental bank rate. There’s too many variables right now to predict when that will be.  Sometime in 2023.  Be patient because the Fed is pushing for a crash landing for the economy. Rather than stimulate and facilitate, they’re sticking to their political shtick and crippling regulation.

Oil prices fell $5 a barrel today which gives the economy a little breather, but oil experts are certain that supply squeezes and Russian oil blockades will push the price well up, perhaps to $120.  You’d have to be riverboat gambler to buy oil stocks. But they may be your best short term bet, especially after today’s drop in price. With consumer demand getting crushed, it’s resulting in reduced demand for fuels, temporarily.

This winter will be difficult for Europeans and Americans who need to heat their homes. More money will pour into energy expenses and thus less into consumer discretionaries. The high US dollar moving over 110 is likely to raise inflation around the world, something the Fed and Dems don’t seem to understand. That will make the Europe recession deeper and more difficult to arise from.

Check out Price Earnings Ratios

The markets were flying in 2006 with no fears of disaster. And then it happened. The price earnings ratios aren’t has lofty as in 2009, but they’re the 2nd highest overall and inflated by stimulus.

S&P Price Earnings Ratio
Screenshot courtesy of Multpl.com. Stock Price/earnings ratios rocketed and they’re coming down fast.

Price to sales ratio on the S&P shows an alarming trend never seen before. The Price to sales ratio measures companies revenues to the price.  As we can see, revenues are not keeping up and we’re well into the recovery now.  Both price and revenues will grow over the next year, up until the big event.

Price to Sales Ratio for S&P index. Screenshot courtesy of multipl.com

Learn more about the stocks that comprise the S&P 500 Forecast, NASDAQ Forecast, Dow Jones Forecast and the Russell 2000 index. Please do check out stocks to avoid, the best stocks to buy, best tech stocks, and the forecast for the next 6 months.

I’m sure most investors would agree that a stock market crash is just ahead, perhaps in a few years. But the arrival may be accelerated so it arrives within 1.5 years.  2023 is only 18 months away. You need to dig into hedging strategies and finding the best stocks to buy. Wise investors entertain new angles on stock market investment.

Fears of Chronic Stagflation

Even if markets don’t suffer a big downturn, there is the issue of stagflation, which plenty of economists are concerned about. Remember, if the globe gets hit by stagflation, it may impact the US. And with US spending the most, having the biggest inflation risk and the risk of high unemployment and stagnant GDP, this has to be taken seriously.

However, the Fed is kicking rates up so fast and so high, the economy will crash and stagflation would end.

Inflation is real enough with stimulus, consumer recovery spending, high energy prices, supply chain problems, interest rates to rise, food shortages, manufacturing shutdowns, and lingering high unemployment that may not come down for 2 years. As economies return to normal, including China, will protectionism grow?  This would raise unemployment and cut GDP.

Read more on signals of a stock market crash and what damage a crash would do to the economy and the all important housing market.

You’re probably thinking that anyone intrigued by the matter of the stock market crash is frightened, pessimistic, and ready to sell at a loss. However, what if many investors are looking for ways to profit from a downturn or crash? It’s a big price change event that will catch others off guard.  Wouldn’t that be a smart investor who might consistently make money off of a big rise or dip? And I’m not talking about short selling.

Certain stocks are bound to soar in these inflationary times ahead. These stocks will fly before the crash and if you don’t have them now, then you want to avoid them.

Bitcoin and Cryptocurrency stocks are a case in point. Right now their price is driven by hype and no fundamental value. Hypesters say it’s a certain thing that Bitcoin and Ethereum will ride through the next recession. But central governments need their own currency to manage their country’s economies. This is why each country such as China will create their own cryptocurrency and fuse it with their own dual and price fixed currencies.  The US won’t have that luxury.

The collapse of a country’s currency’s value would have to be catastrophic. The volatility of Bitcoin could be even more extreme in advance of the next crash (It has been now in 2022 September). Financial services firms and banks might be devastated in a recession where cryptocurrency comes into vogue.

The Experts Pre-Crash Stocks to Buy:

Investorplace gives their pre-crash stock picks:

  • Duke Energy (NYSE:DUK)
  • Bunge (NYSE:BG)
  • Murphy USA (NYSE:MUSA)
  • Kroger (NYSE:KR)
  • Unilever (NYSE:UL)
  • Dollar General (NYSE:DG)
  • American Tower (NYSE:AMT)
  • Johnson and Johnson (JNJ)
  • Rite Aid (RAD)
  • 3M (MMM)
  • Altria Group (MO)
  • Smith & Wesson Brands (SWBI)
  • Lockheed Martin (LMT)

And Yahoo likes these recession resistant picks:

  • Apple (NASDAQ:AAPL)
  • Microsoft (NASDAQ:MSFT)
  • Adobe (NASDAQ:ADBE)
  • Procter & Gamble (NYSE:PG)
  • Walmart (NYSE:WMT)
  • PepsiCo (NASDAQ:PEP)
  • Costco (NASDAQ:COST)

The Fool for their pre-crash picks selects United Health, Mastercard, Facebook, Google, Crowdstrike, Snowflake, and Twilio.

Fortune Builders likes these picks:

  1. Apple Inc. (NASDAQ: AAPL)
  2. Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL)
  3. QUALCOMM Incorporated (NASDAQ: QCOM)
  4. Salesforce, Inc. (NYSE: CRM)
  5. Palo Alto Networks, Inc. (NASDAQ: PANW)
  6. The Walt Disney Company (NYSE: DIS)
  7. GXO Logistics, Inc. (NYSE: GXO)
  8. The Boeing Company (NYSE: BA)
  9. MercadoLibre, Inc. (NASDAQ: MELI)
  10. The Goldman Sachs Group, Inc. (NYSE: GS)

Salesforce and Apple seem like long shots, however if you wait to market bottom in let’s say February/March, these may be the best bargain stocks to buy.

The Big Stock Market Gains are Well Gone

The key point for you as a self-directed investor, is how you prepare for and research opportunities during the bottoming period.  New big market gains are coming within the next 5 years.  The 3 month and 6 month outlooks are poor.

What are the Best Types of Stocks?

Investopedia, advises in their guide to look for:

1. counter cyclical (not dependent on employment and consumer confidence)
2. not over leveraged (those with high debt to equity, and vulnerable to rising interest rates)
3. strong cash flow (big sources of revenue regardless of their debt)
4. not speculative (established companies, with stable earnings and less volatility)

Any stocks with all those characteristics combined stand a fighting chance.

US News reports 7 stocks that soared during the last two recessions:

Target (TGT)
Lowes (LOW)
Nike (NKE)
NextEra Energy (NEE)
Walmart (WMT)
Dollar Tree (DLTR)
Home Depot (HD)

NASDAQ’s Recession Picks

NASDAQ says Roku (NASDAQ: ROKU), O’Reilly Automotive (NASDAQ: ORLY), and Costco (NASDAQ: COST) are 3 great stocks to buy.

More interesting insight in prediction for the 2022 stock market, Best Stocks to Buy 2022 and opinions about whether the Stock Market will Crash.

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