I’d invest like Warren Buffett and Nick Train to make a million from the stock market crash
The Motley Fool
Published Jun 22, 2020 16:32
I’d invest like Warren Buffett and Nick Train to make a million from the stock market crash
Ordinary investors really can make a million in the stock market, provided they take their opportunities. A stock market crash like this one is the perfect moment to buy bargain shares, and wait for them to recover. That’s what the world’s greatest investor, Warren Buffett, has always urged.
Experienced investors like a stock market crash because the top companies they have been monitoring for months or years are suddenly available at much lower prices. That happened in March, when the FTSE 100 crashed below 5,000. Almost every stock on the index crashed too, the good along with the bad.
Go shopping for shares in the FTSE 100 crash Warren Buffett loves moments like these. “The best thing that happens to us is when a great company gets into temporary trouble… we want to buy them when they’re on the operating table”.
Naturally, you have to be confident that those stocks can recover. I would still be wary of cruise operators such as Carnival (NYSE:CCL), for example, as that corner of the travel industry looks set to take a long-term hit.
Other FTSE 100 companies, such as educational specialist Pearson and events and information group Informa, look more tempting to me. Both crashed in March, but are now on the comeback trail.
It takes courage to buy stricken companies but if you want to make a million from your investment portfolio, you cannot be too timid. As Warren Buffett also said: “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”.
You will feel a lot more confident holding out your bucket if you plan to hang onto your new stock purchases for the long-term. That is how most ordinary investors make a million on the stock market – over decades of regularly topping up their portfolio and reinvesting all their dividends for growth. It takes time, patience and a nose for a bargain.
Star UK fund manager Nick Train, who runs Finsbury Growth & Income Trust, manages a tight, focused portfolio of high-quality stocks. While many top companies have been forced to raise new equity capital during the pandemic, none of his holdings have. He pins this on the “historic conservatism or cash generative qualities of the companies we choose to invest in”.
Is Nick Train the British Warren Buffett? I was pleased to see FTSE 100 stocks Diageo (LON:DGE) and Unilever (LON:ULVR) among Finsbury Growth & Income’s top holdings, as I have tipped both lately.
London Stock Exchange Group (LON:LSE), information group Relx, Schroders (LON:SDR), Burberry, Hargreaves Lansdown (LON:HRGV), and software company Sage Group (LON:SGE) also feature in the trust’s top 10 holdings.
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Nick Train is asking two questions of companies right now. “First, can you reassure us that you will survive the effects of the lockdown? And, next, what measures are you taking to ensure that you emerge from it stronger and with enhanced prospects?”
If you want to accelerate your bid to make a million from the stock market crash, I’d look for companies that can provide positive answers to those two questions.
The post I’d invest like Warren Buffett and Nick Train to make a million from the stock market crash appeared first on The Motley Fool UK.
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Motley Fool UK 2020
First published on The Motley Fool
Written By: The Motley Fool
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