Unfortunately, another stock market crash is inevitable.
Like it or not, a crash happens
While we can never predict precisely when a crash will occur, how long it will last, or how steep the final decline will be, history clearly shows that sharp declines in the stock market are a normal part of the investment cycle. , and the price of entry to one of the greatest creators of wealth on the planet.
For example, stock valuations have been ringing the alarm bells for some time. At the closing bell on May 24, the S&P 500’s Shiller price-to-earnings ratio – a P / E that examines inflation-adjusted earnings from the previous 10 years – closed at 37.22. This is more than double the average Shiller P / E ratio since 1870. The biggest concern is that in the previous four cases where the S&P 500 Shiller P / E ratio exceeded 30 and maintained that level, the index largely tracking then lost at least 20% of its value.
Plus, history tells us that rebounds from bear market lows are never so smooth. In the past 61 years, there have been nine bear markets, including the coronavirus crash. In the previous eight bear markets, there have been one or two instances of the S&P 500 double-digit percentage decline within three years of the bear market bottoming out. Without exception, double digit declines are normal as the market seeks to recover from a bear market.
The cap is that there have been 38 instances where the S&P 500 has fallen by at least 10% since 1950 (once every 1.87 years).
In short, it is inevitable that another stock market crash will occur.
Crashes and Fixes are the Perfect Opportunities to Buy Good Deeds at a Discount
On the flip side, history also shows us that every crash in history has been a major buying opportunity. If you buy big companies at a discount and your investment thesis materializes over time, you have a very good chance of building wealth.
When the next stock market crash hits, consider putting your money to work in these three unstoppable actions.
Actions Fintech Square (NYSE : SQ) aims to reshape the financial services space. With two exceptionally growing segments propelling its sails, it can be bought with confidence during any stock market crash.
Most people are probably familiar with Square’s seller ecosystem. If you’ve ever bought something from a small merchant, you might have used a point-of-sale device from Square. In addition to point-of-sale devices, it provides analytics and loans to help businesses succeed. In the seven years leading up to the pandemic, the gross payment volume (GPV) processed on the company’s seller ecosystem grew on average 49% per year to reach $ 106 billion in 2019.
The best thing about the seller ecosystem is that it is primarily driven by merchant fees. In other words, the bigger the trader, the more gross profit Square is likely to generate. Over the past two years, his GPV from companies generating at least $ 125,000 in GPV on an annualized basis has increased 9 percentage points to 61%.
But the biggest long-term draw for investors is the digital peer-to-peer Cash App payment platform. In three years, the monthly number of active Cash App users has more than quintupled to 36 million. Payment card usage is on the rise (the payment card acts like a debit card drawn from a user’s Cash app balance) and the gross profit per user is $ 41. In one context, Square spends less than $ 5 to acquire new users. These are insane margins that should allow Cash App to become the gross profit engine of the business.
If Wall Street published a dictionary, I would push for Intuitive surgery‘s (NASDAQ: ISRG) company logo to go next to the definition of “unstoppable”. This supplier of robot-assisted surgical systems has clear competitive advantages and an operating model ready for margin expansion. A crash would be a great time to grab some discounted stocks.
Intuitive Surgical has made a name for itself with the da Vinci Surgical System. Surgeons trained in the use of da Vinci can make more precise incisions than with laparoscopic surgery, often resulting in fewer complications and faster recovery time for patients. But what’s amazing is that Intuitive has installed more than 6,100 of its systems around the world in two decades. This is far more than any of its competitors on a combined basis.
The company has also seen its sales channels evolve more favorably since the 2000s. In the beginning, most of its revenue came from the sale of its expensive da Vinci systems. The unfortunate part is that these are complicated systems to build, which have only led to poor margins. Over time, higher margin revenue channels now account for the bulk of its sales. This includes the sale of instruments and accessories with each procedure, as well as the maintenance of its systems. As a result, Intuitive Surgical’s revenue growth is expected to exceed its sales growth over time.
Keep in mind that branded stocks can still make a fortune for patient investors. This is why a stock market crash would be the perfect time to recover shares of the unstoppable social media giant Facebook (NASDAQ : FB).
When the curtain closed in the first quarter of 2021, Facebook had 2.85 billion monthly active users visiting its namesake site and an additional 600 million unique visitors heading to WhatsApp or Instagram each month. That’s 3.45 billion unique people (roughly 44% of the world’s population) visiting an asset owned by Facebook each month. Advertisers know full well that they can’t go anywhere else and get such a large or targeted audience for their product or service. This is why its advertising pricing power is virtually unmatched.
What’s amazing, however, is that Facebook is only in the early stages of growth. It may be hard to fathom for a company with nearly $ 86 billion in revenue last year, but it’s the truth. Although it has monetized its namesake site and Instagram for advertising revenue, neither WhatsApp nor Facebook Messenger, two of the most visited social platforms on the planet, generate significant revenue. When Facebook opens the floodgates on these assets, its sales and operating cash flow are expected to skyrocket.
And that’s still not all. Facebook also offers plenty of ancillary income opportunities. Its “Other” segment, which includes its Oculus virtual reality (VR) devices, saw first quarter sales increase 146% to $ 732 million. Whether it’s virtual reality devices, financial services, streaming, or whatever, Facebook has plenty of opportunities to expand its revenue channels beyond advertising.