Time to start preparing for a stock market crash?

Initially of this yr, various individuals had been nervously weighing up the prospects of a inventory market crash.

But right here we’re in the midst of December and the FTSE 100 index of main UK shares is 18% increased than it was in the beginning of the yr. Stateside, the S&P 500 inventory index has moved up equally, by 16%.

It has not been a clean trip. Again in April we noticed a inventory market correction within the FTSE 100, whereas from mid-February to early April the S&P 500’s fall of 19% got here very near the usual definition of a inventory market crash (a 20% or extra fall in a brief time period).

it in the present day, although, this yr has to this point delivered a robust efficiency available in the market.

In contrast, although, financial efficiency has been combined. The UK economic system is struggling to develop in any respect, whereas the US economic system has additionally despatched out combined alerts over the course of the yr. Wanting on the US economic system apart from the AI phenomenon, this has been a troublesome yr in lots of components of the economic system.

So, as an investor, ought I to be getting ready for a inventory market crash?

All the time preparing

The reply, to my thoughts, is sure.

However that isn’t as a result of I particularly worry a crash quickly. It’s as a result of the savvy investor can probably profit by all the time being prepared for the prospect of a crash.

Certain, there are causes to be fearful that the market might crash quickly: a weak economic system, some dizzying AI inventory valuations, and geopolitical uncertainty are amongst them.

However there have been causes to worry a crash in the beginning of 2025 too. In actuality, no person can time the market with whole confidence.

What we do know, nonetheless, is that in the end the inventory market will crash. Historical past has taught us that.

I believe it pays to be prepared, so one can swing into motion and go trying to find bargains that could be short-lived!

All of the sudden unloved – or unlovable?

For example, let’s return to April.

At one level in mid-March, shares in Video games Workshop (LSE: GAW) bought for round £149 apiece. Inside weeks, they had been right down to £124 every.

The FTSE 100 fantasy gaming firm has international gross sales, though its manufacturing footprint is concentrated on the UK. The autumn within the share worth means that buyers fretted concerning the influence tariff disputes may need on profitability.

Maybe commerce disputes might harm disposable revenue ranges in key markets, damaging demand for fantasy collectible figurines.

However was a 17% share worth fall in lower than one month justifiable?

To me, the extremely worthwhile firm with sturdy pricing energy all the time seemed more likely to discover a technique to adapt to a brand new buying and selling setting, even when tariffs posed a short-term danger to income.

Since that April low, the Video games Workshop share worth has rallied a formidable 60%.

Traders who noticed the mismatch between enterprise high quality and share worth then have been richly rewarded inside just some months.

That’s the reason I’m making a listing now of nice companies I want to personal if the following inventory market crash provides me a horny sufficient shopping for alternative!