Don’t panic! You haven’t missed the opportunity to pick up bargain FTSE 100 stocks

You still have plenty of chances to pick up bargain stocks in this bear market, believes Harvey Jones.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Last week’s stock market crash threw up some amazing bargains. With the FTSE 100 down 12% from its peak at one point, it was a good time to step in and buy top British companies at massively reduced valuations.

The Fool was doing what it always does at times like these, urging readers to be brave and seize the opportunity to top up their Stocks and Shares ISAs. I’d focus on companies with strong fundamentals, such as loyal customers, regular cash flows and healthy balance sheets, that have been caught up in the general sell-off.

In times of general market panic, investors indiscriminately dump the good along with the bad. If you’re alert, you can pick up all those companies you wanted to buy, but thought were a little expensive at the time. Or you could simply invest in a FTSE 100 tracker.

Decide how much risk you can take

Alternatively, you could be really bold and go shopping for stocks at firesale prices in the worst hit sectors which, in this case, seems to be travel. Tour operator TUI, budget airline easyJet, cruise specialist Carnival, and hotel chain InterContinental Hotels Group have been particularly hard-hit. You only have to see the fate of Flybe to understand why.

Whichever sector you dive into, you must be sure that the underlying business is strong, has manageable debts, and the strength to recover once the immediate threat has passed. In this case, of course, the threat is the deadly coronavirus.

Markets have mounted a recovery in the past few days. The FTSE 100 has picked up from Friday’s low of 6,580, to trade at 6,732, at time of writing, an increase of around 2.3%. Some of you may think that you’ve missed your opportunity as a result. 

I’m not so sure. My experience of previous crises is that stock market panic comes in waves. Investor sentiment lurches from one extreme to another. One minute despair, the next hope. Bottom fishers and profit takers add to the confusion.

Looking at this morning’s newspaper headlines, I wouldn’t be at all surprised to see another sell-off in the days ahead. The spread of the virus is genuinely disturbing.

Be cool

What investors need to do now is stay calm. There’s enough panic around. If you buy now, you are still getting a good entry price, as the FTSE 100 is still down more than 10% year-to-date.

If it falls further, you can buy a little more. I reckon this is the best way to approach the current bear market, by drip feeding money in, and buying on the dips.

You have to accept that you’ll never get it absolutely right, and buy right at the bottom. Timing markets accurately is beyond even the best investment experts. So take your opportunities when you see them, and hold on for the long term.

Things may look grim now, but this crisis will pass too.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Growth Shares

This major UK bank just updated the forecast for the Rolls-Royce share price

Jon Smith talks through an analyst forecast for the Rolls-Royce share price and explains why he thinks further gains could…

Read more »

Middle-aged white male courier delivering boxes to young black lady
Investing Articles

This FTSE 100 share looks like a Black Friday bargain for me!

Our writer explains why he recently took the opportunity to buy this ultra-cheap FTSE 100 share after its 39% year-to-date…

Read more »

Investing Articles

What will happen to the stock market in 2025? Here’s what the experts say

The UK stock market did well at the start of this year but has faltered towards the end. Our writer…

Read more »

Investing Articles

After plunging nearly 40%, I’m considering buying this bargain FTSE 100 stock

Paul Summers has been running the rule over one of the year's biggest FTSE 100 losers. Is a screamingly cheap…

Read more »

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: this month’s lower-risk, higher-yield Share Advisor recommendation [PREMIUM PICKS]

Ice ideas will usually offer a steadier flow of income and is likely to be a slower-moving but more stable…

Read more »

Investing Articles

Should I buy growth or value in my Stocks and Shares ISA?

Here’s why Stephen Wright's looking past the difference between growth stocks and value shares when finding investments for his ISA.

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

If I’d invested £5,000 in a Nasdaq index fund 5 years ago, here’s how much I’d have now

The Nasdaq index keeps hitting new all-time records in 2024, as US tech stocks fly. How much could I have…

Read more »

A senior group of friends enjoying rowing on the River Derwent
Investing Articles

£500 to invest a month? Consider aiming to turn that into a £20,000 passive income like this!

With a regular monthly investment, it's possible to build a large and steady passive income for retirement. Royston Wild explains.

Read more »