A stockmarket correction could be just around the corner.
Or maybe even a CRASH!
Who knows really, but the fact is, we are well overdue for one.
Global equity markets have rallied hard in recent years without looking down, but a sudden plunge on Friday has investors on the edge.
Make no mistake, this really could be the start of something big. Stockmarkets around the world could plunge 10% or more in the coming weeks or even days!
I'm sure plenty of investors will be selling out of their investments in a state of panic today. Perhaps that would explain the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) dropping a further 27 points this morning.
Alternatively, the market's most recent drop could simply prove to be just another dip that will be completely forgotten in about a fortnight's time. Heck, the market could be at 6,000 points by then for all we know!
The reality is, we don't have any idea what the market will do this week or this year. We don't even know what it will do tomorrow for that matter!
One thing is for sure though – investors need to be prepared for absolutely anything.
While the market will rise over the long term, we all need to ensure our portfolios are strong enough to survive if the market does take a sudden dive. This can be achieved by buying solid blue-chip stocks that are built to last, as well as companies that tend to thrive in a downturn.
Here is a list of three companies you should consider buying today, in case the market's recent drop does prove to be something much bigger…
- Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is a conglomerate of unlisted and listed businesses. As the second-oldest listed company in Australia (having been born in 1872), Soul Patts has more than proven its resilience to market gyrations. While its investments are spread over various industries – thus diversifying its risk – the company also offers a generous 3.2% fully franked dividend yield.
- When fear levels spike in the market, investors turn to gold which is considered to be a safe haven. This of course benefits the gold miners themselves as they can sell the precious metal at a higher price. Low-cost producer Northern Star Resources Ltd (ASX: NST) is a good bet for investors right now. While the company recently reported strong production results for its June quarter, earnings and dividends are both expected to improve in the coming years, making now a good time to buy.
- Cash Converters International Ltd (ASX: CCV) is another company investors should consider. While it is trading at a very reasonable price, with a P/E ratio of 12.9 and a fully franked yield of 3.8%, it should also hold up well in the case of a market downturn. When conditions get tough, it's not uncommon that individuals will pawn smaller assets for a little extra cash, while many also seek short-term loans – both of which Cash Converters can assist with. In addition, the company boasts strong growth prospects locally (for instance, its Carboodle business) as well as internationally.
An ASX growth stock for ANY market conditions
Investors have been lucky enough to experience a bull market in recent years with many reaping massive returns. But as Warren Buffett indicated when he said: "Only when the tide goes out do you discover who's been swimming naked", the real investors are the ones holding up well when the market turns sour.
