A 2020 Market Crash Could Be Your Chance to Make Millions

A market crash is simultaneously the best and worst time for investors. Find out how the potential market crash can be turned into a fantastic opportunity.

| More on:
Arrow descending on a graph

Image source: Getty Images.

Investors are getting ready for the gloomy clouds of recession to come and rain all over their profits and growth prospects. But it doesn’t necessarily have to be like that. You can indeed expect many of the stocks in your portfolio to perform poorly if the market crashes. But these dark clouds have a silver lining, too.

I’ll start the good news by quoting the wizard of Omaha, Warren Buffett, himself: “Be fearful when others are greedy and greedy when others are fearful.” And “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” These two quotes should give you an idea on how you can cash out the potential market crash in case it comes.

A recession makes investors afraid. Many try to solidify their portfolios to weather the crash. This is an excellent approach. It would help if you tried to do whatever you can to protect your investments. But clutching your savings close to your heart during a recession, and waiting for the storm to pass is not the only way to go through a market crash — a better way to keep your eyes peeled on your favourite stocks and buy the dip.

A market crash indeed has the potential to crush some business to dust. But most established companies come out of the crash relatively unscathed. But when the stocks of good companies take a hit during the crash, it presents a fantastic opportunity for investors to load up on those stocks. Because when the companies start rising, your recession-time investment may have the potential of making you millions.

Though there are many good companies to consider in a market crash, the two I would like to suggest are Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and ATCO (TSX:ACO.X).

One of the Big Six

Bank of Nova Scotia is the third-biggest bank in the country, with a market cap of $89.77 billion. Like the overall banking sector, Bank of Nova Scotia enjoys the relative stability of the banking sector. Currently, the bank is trading at $73.82 per share and offers a juicy yield of 4.82%, the second-highest among the Big Six.

Even though the country’s banking sector is rock solid, it’s not entirely immune to market crashes. In the last recession, the stock dipped almost 44% since December 2007. But when the stock got back up, it doubled investors’ money in just two years.

An additional benefit is the bank’s dividends. It’s a Dividend Aristocrat and likely won’t slash the benefits during the market crash.

A holding company

ATCO is a diverse holding company, with a stellar history of increasing dividends for 25 consecutive years, even during the Great Recession. Currently, the company offers a decent yield of 3.23%.

During the recession, the company’s market value plummeted around 45%. It took the company a bit over four years to reach from its lowest to the highest market value, and ATCO grew well over 200% during that time, making investors $3 per for every dollar in fewer than five years.

Foolish takeaway

A market crash might shake your current portfolio a bit. You might even lose a bit of money, no matter how efficiently you prepare. But instead of hoarding cash for safeguarding, make some bold and smart investments during the crash. Your returns will more than make up for any losses you suffer.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »