A stock market crash in 2021 in looming. An accelerating second wave of the coronavirus is hitting hard. Different provinces are entering lockdowns. The economy has already been hit hard. 2021 will see a whole lot of new pain.
So what can we do to prepare for this? First, let’s understand that it will be stressful. Also, we must have a clear plan. If you have a few years until retirement, sit tight. Take the next TSX stock market crash as an opportunity to buy cheap stocks.
A market crash 2021 will be ultra-stressful
In the last market crash of 2020, it was stressful. The TSX fell over 35%. Many stocks got hit even harder. And this happened in just over a month. But to be clear, every stock market crash is stressful. Every market crash has hit the TSX hard.
We don’t know what the details of this next market crash will be. We also don’t know how far the market will fall. And we don’t know how long it will last. But we do know that, based on history, the market will come back in time.
Have a clear plan for the market crash of 2021
So now we hopefully have accepted that a market crash will be stressful. It seems like a basic concept, right? But being prepared for the emotions that will come with the next market crash is essential. If we are ready for these emotions, we might not let them cloud our thinking.
The best buying opportunities in history have come after a market crash. Investors who overcame their fear bought. Investors who kept their stress in check bought. And investors who kept thinking clearly and intentionally bought. In order to benefit from the next market crash, start making peace with fear and stress. Accept that these are feelings that will accompany the best buying opportunities.
How can you benefit from the next market crash?
Fortis Inc. (TSX:FTS)(NYSE:FTS) is a good stock to get your feet wet with this concept. Fortis is a North American leader in the regulated gas and electric utility industry. It’s a utility, which means that its revenue base is highly defensive. We can rest assured that Fortis’ products/service will always be in demand. Keep Fortis in your back pocket. Get ready to pounce when it falls under $40.
Canadian Natural Resources Ltd. (TSX:CNQ)(NYSE:CNQ) is a little different. It’s also a large company in good financial standing. But it’s exposed to oil prices. So that could be a good thing or a bad thing. That depends on your view of where oil prices are going. I think they’re going higher, which means that CNQ stock is a top stock pick when the market crashes.
The oil and gas industry is setting up for a comeback. Years of underinvestment in the industry has paved the way to declining production. This supply hit will take hold just as demand starts to return in 2021. I’m convinced that demand will increase because the vaccine will change everything.
The bottom line
I’ve mentioned two of the many stocks that I believe are top stocks to buy after the market crash of 2021. They’re stocks that have solid operational performance. They also have solid financial strength. And they are well suited for an eventual recovery as the vaccine is administered.
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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 Karen Thomas owns shares of Canadian Natural Resources and CDN NATURAL RES. The Motley Fool recommends FORTIS INC.