Image Source: Getty Images
The last seven weeks have been a volatile time for UK stocks. After the FTSE 100 index peaked on February 16, a stock market crash has caused panic. And when there is panic on the streets of London, I see a golden opportunity to get rich in the long run.
the market falls
In the first weeks of 2023, the blue-chip index maintained the rise that began when the US stock market bottomed on October 12, 2022. From December 30, 2022 to February 16, 2023, the index jumped 8% to reach a record intraday high of 8,047.06 points.
At this point, I realized that the Footsie might have gone too far, too fast. After all, it is up an impressive 17.9% since its close on October 12. With investor exuberance so high, I felt a dip was coming.
For the record, the FTSE 100 closed at 7,335.4 on Friday. This leaves it almost 712 points down (-8.8%) in just over a month. Furthermore, the index has now lost 1.6% of its value in 2023. For many investors, this drop has come as a shock.
Why stocks are like socks and hamburgers
My investing hero, billionaire investor and philanthropist Warren Buffett, has commented many times that falling stock prices can lead to great bargains.
For example, he once wisely commented: “Whether we’re talking socks or stocks, I like to buy quality products when they’re on sale.” In 1997, he made a similar comment, arguing that hamburger buyers should want lower prices for beef.
So why do investors panic when the stock market falls? Surely we should accept lower prices to buy products of much the same quality. From my perspective, I plan to buy and own more shares in the coming years, so bargain purchases now should boost my future returns.
What stocks would you buy now?
When the stock market tanked again on Wednesday, I begged my wife to find cash to buy even more shares. Unfortunately, she couldn’t please him. Not because we’re broke, but because she’s already invested close to 100% of our extra money in stocks.
In short, I have been desperate to buy stocks this week. As an old-school value investor, I see deep value hidden in the FTSE 100. For example, if someone handed me £25,000 in cash today, I would immediately invest it in, say, five quality stocks.
For me one of the biggest deals in London today is Blue Eagle bank. barclays (of which I already have some shares). At Friday’s low, this undervalued stock hit 137.74 pence. At this price, this stock offers a tasty dividend yield of 5.2% per year, with this cash return more than four times covered by earnings.
However, these are historical figures, based on the bank’s latest earnings. And as the UK economy weakens and consumer confidence falls, banks’ bad debts and loan losses should rise. Still, with such a wide margin of safety, Barclays seems like a bargain for passive income to me.
In addition, I see exceptional value lurking in several sectors of the FTSE 100. These include asset management and insurance, banking, oil and gas, mining and telecommunications. So if this stock market crash continues, I’ll be buying even more cheap stocks in April when I have money to spare!
var config = {
apiKey: ‘1ed121d592e04642d57912bb369ef696621661a3’,
product: ‘PRO_MULTISITE’,
logConsent: false,
notifyOnce: false,
initialState: ‘NOTIFY’,
position: ‘LEFT’,
theme: ‘DARK’,
layout: ‘SLIDEOUT’,
toggleType: ‘slider’,
iabCMP: false,
closeStyle: ‘button’,
consentCookieExpiry: 90,
subDomains : true,
rejectButton: false,
settingsStyle : ‘button’,
encodeCookie : false,
accessibility: {
accessKey: ‘C’,
highlightFocus: false },
onLoad: function () { // hide Cookie Control recommended settings button.
var recommendedSettingsButton = document.getElementById(‘ccc-recommended-settings’);
if (recommendedSettingsButton) {
recommendedSettingsButton.classList.add(‘hide’);
} },
text: {
title: ‘Privacy Notice’,
intro: ‘This site uses cookies, pixels, and other similar technologies to improve your web site experience and to deliver you personalised ads about our own and third party products and services. Please read more about how we collect and use data about you in this way in our Cookies Statement in our Privacy Policy. You can change your cookie settings in your browser at any time. ‘,
necessaryTitle: ”,
necessaryDescription: ”,
thirdPartyTitle: ‘Warning: Some cookies require your attention’,
thirdPartyDescription: ‘Consent for the following cookies could not be automatically revoked. Please follow the link(s) below to opt out manually.’,
on: ‘On’,
off: ‘Off’,
accept: ‘Accept’,
settings: ‘Cookie Preferences’,
acceptRecommended: ‘Accept Recommended Settings’,
notifyTitle: ‘Privacy Notice’,
notifyDescription: ‘This site uses cookies, pixels, and other similar technologies to improve your web site experience and to deliver you personalised ads about our own and third party products and services. Please read more about how we collect and use data about you in this way in our Cookies Statement in our Privacy Policy. You can change your cookie settings in your browser at any time. ‘,
closeLabel: ‘Save Preferences and Close’,
accessibilityAlert: ‘This site uses cookies to store information. Press accesskey C to learn more about your options.’,
rejectSettings: ‘Reject All’,
reject: ‘Reject’,
},
branding: {
fontColor: ‘#fff’,
fontFamily: ‘Arial,sans-serif’,
fontSizeTitle: ‘1.2em’,
fontSizeHeaders: ‘1em’,
fontSize: ‘1em’,
backgroundColor: ‘#313147’,
toggleText: ‘#fff’,
toggleColor: ‘#2f2f5f’,
toggleBackground: ‘#111125’,
alertText: ‘#fff’,
alertBackground: ‘#111125’,
acceptText: ‘#ffffff’,
acceptBackground: ‘#111125′,
buttonIcon: null,
buttonIconWidth: ’64px’,
buttonIconHeight: ’64px’,
removeIcon: false,
removeAbout: false },
necessaryCookies: ( ‘wordpress_*’,’wordpress_logged_in_*’,’CookieControl’,’PHPSESSID’,’fivc’,’fivs’,’fivp’,’Ookie’,’Fool_subinfo’,’_gads’,’_gid’,’_gat’,’_ga’,’__utma’ ),
optionalCookies: (
{
name: ‘Sharing’,
label: ‘I would like content tailored to my personal preferences.’,
description: ‘We work with advertising partners to show you ads of products and services you may be interested in. You can choose whether or not to have ads delivered in a personalised way by setting this option. You can return to review this setting at any time by clicking the "C" logo in the bottom left corner of any page.’,
cookies: ( ‘_ga’, ‘_gid’, ‘_gat’, ‘__utma’, ‘_gads’ ),
onAccept: function () {
// Add Facebook Pixel
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=();t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)(0);
s.parentNode.insertBefore(t,s)}(window,document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘901682110316659’);
fbq(‘track’, ‘PageView’);
fbq(‘consent’, ‘grant’);
// End Facebook Pixel
// Enable Google ad personalization
// gtag (‘set’, ‘allow_ad_personalization_signals’, true ) ;
},
onRevoke: function () {
fbq(‘consent’, ‘revoke’);
// Enable Google ad personalization
// gtag (‘set’, ‘allow_ad_personalization_signals’, false ) ;
},
recommendedState: ‘on’,
lawfulBasis: ‘consent’,
},
),
statement: {
description: ”,
name: ”,
url: ‘https://www.fool.co.uk/help/privacy-and-cookie-statement/’,
updated: ”
},
};
CookieControl.load(config);
