There’s been a lot of talk about a potential stock market crash recently, with more investors sounding the alarm around a potential AI bubble and high US market valuations.
While the FTSE 100 doesn’t look overvalued, or have much exposure to AI, it would be unlikely to emerge totally unscathed from a meltdown. “When the US sneezes, the world catches a cold“, as the old saying goes.
Should you buy Scottish Mortgage Investment Trust Plc shares today?
Before you decide, please take a moment to review this report first. Despite ongoing uncertainties from US tariffs to global conflicts, Mark Rogers and his team believe many UK shares still trade at substantial discounts, offering savvy investors plenty of potential opportunities to learn about.
That’s why this could be an ideal time to secure this valuable research – Mark’s analysts have scoured the markets to reveal 5 of his favourite long-term ‘Buys’. Please, don’t make any big decisions before seeing them.
I don’t spend much time worrying about a crash, but one can’t be ruled out. So here are five things to consider doing (or not) during a market meltdown
Don’t panic sell
I think the first and most important thing is not to panic. Easier said than done at the time, I know, but panicking clouds judgement and that’s obviously not ideal for making sound decisions.
Taking the long view can help, in that there have been multiple crashes throughout history. And every single time the market has recovered (eventually) to go on to new record highs.
Stop refreshing the portfolio
Linked to this first point, I would not constantly refresh one’s portfolio of stocks. During a meltdown, looking at a sea of red on the screen — with massive individual drops like -11% and -17% — is not going to help.
In fact, it’s just emotionally draining!
When the market tanks, I tend to focus on something else rather than constantly check my stocks. I run through the local forest, take a swim, or check out that Netflix series I’ve been meaning to watch.
Anything other than the stock market.
Don’t lose sight of the bigger picture
Crucially, it’s important to remember why you’re invested in the first place. As a long-term investor, my goal is to try and create wealth across time.
Sadly, it’s not possible to do this without experiencing a couple of crashes (or more) along the way. It’s the price of admission to the stock market.
Use leverage
Another thing I avoid doing is using leverage. That is, using debt as a tool to magnify returns.
The reason, of course, is simple: this might increase losses.
I always remember an old work colleague who lost money when a very risky penny stock crashed. Still convinced about the merits of the investment, he borrowed money to double down.
Needless to say, that didn’t end well for him.
Look for bargains
That said, a market crash is absolutely the ideal time to go bargain-hunting, assuming the shares are high quality (which is certainly not the case with most penny stocks).
One FTSE 100 share worth considering on significant weakness is Scottish Mortgage Investment Trust (LSE:SMT). This fund has had great success finding and investing in transformative growth companies.
Today, the portfolio includes SpaceX, Amazon (which jumped over 10% this week), MercadoLibre, Nvidia, and ASML. On top of this, it also has stakes in game-changing private firms like AI lab Anthropic and Revolut.
In recent weeks, however, the trust has become a victim of its own success because its wildly successful SpaceX investment now dominates the portfolio. As such, there’s near-term concentration risk if SpaceX keeps crashing.
Taking a longer-term view, though, I think this is an excellent stock to consider, both today and especially in the future if it sells off heavily.
Should you invest £5,000 in Scottish Mortgage Investment Trust Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage Investment Trust Plc made the list?
Ben McPoland owns shares in MercadoLibre, Nvidia, and Scottish Mortgage.
