The FTSE 100 is down approximately 28% year-to-date. Do I think it has further to fall? Probably, but when it recovers, I think the revival will be sharp.
The coronavirus pandemic has sparked market volatility all around the world. For shareholders, this is a very unsettling time.
So, the question from many an investor is, should you buy FTSE 100 stocks now or wait?
The month has barely begun, and we’re witnessing a wild ride of unprecedented swings in global financial markets. Death tolls are mounting, and the extent of the Covid-19 spread isn’t yet clear, so further index falls are likely.
Yet, the long-term investor mindset is to ignore short-term fluctuations and focus on buying quality companies for the long haul. If you follow this logic, then the price you pay at the outset shouldn’t be of too much concern. This is assuming that it’s likely to increase over the long term (as in a minimum of 5 to 10 years).
A FTSE 100 spiritual blend
Choosing stocks and shares to buy can be difficult in precarious times like these. I like to focus on stocks to invest in that have staying power and will stand the test of time.
A FTSE 100 favourite, Diageo (LSE:DGE), is one such stock. The 23-year-old company is a global leader in branded alcoholic drinks, selling over 200 brands of popular spirits and beer.
That’s why I think Diageo is a FTSE 100 share to buy in April, despite the fluctuating FTSE index and multiple headwinds.
The Diageo share price has plunged
The Diageo share price is down 8% this week and 22% year-to-date. It has a price-to-earnings ratio of 18 and a dividend yield of 2.8%. Earnings per share are £1.30.
The £57bn company is ambitious, with massive scale and geographical coverage. Diageo is not averse to strategic acquisitions, so I wouldn’t be surprised if it snaps up more quality brands given the current financial climate.
When the pandemic is over and a sense of normality resumes, I think people will be keen to socialise. This will probably involve drinking alcohol, and Diageo can go back to enjoying rising sales.
Emerging from a financial crisis
Past market crashes have witnessed shareholders both winning and losing. The path the winners took was to hold. You don’t realise losses until you sell your shares, but holding is difficult. It goes against your natural instinct to grab what you can to save yourself and survive.
Try to remember that, following past major crashes, the FTSE 100 recovered and reached new record highs. Buying in during these low points gives brave investors the opportunity to realise significant gains in the years to come.
Although a bull run may seem a distant dream right now, history indicates one is likely to return once the pandemic has run its course and familiarity returns.
