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I believe that a series of issues affecting the markets have made FTSE 100 unmissable actions. The low valuations, as well as the possibility of a bull run once the fog of macro issues clears, excites me!
Why are FTSE 100 stocks struggling?
In my opinion, the current crisis can be traced back to the pandemic. That’s when most of the world’s markets collapsed. Since then, there have been problems and events one after another that have prevented a bull run or any market stability.
Since the pandemic, we have limped toward macroeconomic turmoil. This, of course, is the high-inflation, high-interest-rate economic environment we find ourselves in. The unfavorable byproducts of these problems are a cost of living crisis, as well as fears of recession and a supply chain crisis.
Finally, government budgets. Yes, I’m talking about THAT disastrous mini-budget last year, and the implications of Brexit haven’t helped. From a Brexit perspective, I think the UK is not as attractive to foreign investors due to economic uncertainty. Furthermore, the tragic events in Ukraine have not helped FTSE 100 shares or global markets.
How do I approach the stock market?
One of my main goals is to increase my passive income. To do this, I look for stocks with attractive yields and consistent payouts. I understand that dividends are never guaranteed.
There are several FTSE 100 stocks that could meet my passive income goals. I am optimistic Vodafone (LSE:VOD) shares. It is one of the largest telecom companies in the world with exposure to emerging markets, such as Africa, and I believe it can also provide me with decent returns and potential growth in the future. The stock looks cheap with a price-to-earnings ratio of three and a dividend yield of 9%. However, Vodafone’s debt level could make payments difficult. Debts are harder to pay when interest rates rise, like now.
I firmly believe in diversifying life and investments. I mentioned a telecommunications business I like and I already own shares in several real estate investment trusts (REITs). These are real estate businesses that must return 90% of the profits to shareholders.
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I am also looking at other major sectors such as banking and food retailers. This is because some FTSE 100 stocks have defensive capabilities. For example, in the case of grocery stores, no matter the scenario, everyone has to eat.
I like the look of tesco (LSE:TSCO) shares. Tesco is one of the largest supermarkets in the United Kingdom. It has recently streamlined its operations and appears to be decent value for money with a P/E ratio of 12. This should fall in the future if its positive forecasts come true, although this is never guaranteed. The current ratio is lower than the FTSE 100 average of 14. One problem Tesco has to overcome is food inflation. Rising prices could prompt its customers to look for alternatives, including budget retailers such as Aldi and Lidl, which are already rapidly capturing market share in the UK. This could harm Tesco’s performance and payments.
I have a list of FTSE 100 shares that I want to buy when I have the extra money to do so. I mentioned a couple above and what I’m trying to achieve. Once I pass the current opportunity, I think it may not happen again for several years!