How to Prepare for a Stock Market Crash or Correction

Investors should keep in mind that crashes and corrections are a normal part of the investing cycle. Moreover, a stock market crash or correction is coming. As a reminder, over the past 71 years, there have been 38 instances where the benchmark S&P 500 has lost at least 10% of its value. Interestingly, that’s an average of one correction every 1.87 years.

At the moment, there is no shortage of catalysts that could send the market lower. For example, the S&P 500’s Shiller price-to-earnings ratio is near a two-decade high. Moreover, coronavirus disease is another serious issue.

However, where there is a stock market crash or correction, there is also an opportunity for long-term investors to get rich.

Stock market and several tips

If the stock market does crash, it makes sense to invest in Visa, Philip Morris International, and Amazon.

Let’s start with Visa. People should keep in mind that Visa is one of the best companies investors can buy during any weakness. Interestingly, Visa is playing a numbers game that’s heavily in its favor. As a reminder, it controlled 53% of all credit card network purchase volume in the U.S in 2018.

It is worth noting that, economic contractions and recessions are a natural part of the economic cycle. However, periods of expansion last significantly longer. As a result, buying Visa is a bet that the U.S. and global economy will grow over time.

Let’s move to Philip Morris International. As a reminder, if volatility picks up and equities nosedive, few industries can be more lucrative for investors.

Amazon has the third-largest market cap among publicly traded U.S. stocks. However, its ceiling

remains incredibly high.

Importantly, Amazon’s dominance in the online space can’t be overstated. Furthermore, the company’s marketplace should widen its share of U.S. e-commerce by 100 basis points in 2021 to just shy of 40%. As stated above, if the stock market does crash it makes sense to invest in Amazon, Philip Morris International, and Visa.