Best Investments During A Stock Market Crash

During a Stock Market Crash, Which Investment is Better: Commodities or Cash?

On a recent Rebel Capitalist Pro members-only live Q&A, a member asked Glenorchy Capital money manager Chris MacIntosh whether he thinks investors would gravitate towards cash or commodities if a stock market crash were to happen.

Chris begins his answer by stressing that it's important to consider the timeframe and investment choices. Chris doesn't time markets. He's unsure what the immediate short-term investing strategy will look like, but one thing is for sure, he doesn't want to get caught owning fiat five years from now.

One of the Best Investments During a Stock Market Crash Can Be Found in Commodities, Which Offer Deep Value Potential.

Investors like Chris, who focus on deep value, tend to invest in undervalued companies. Right now, all signs are pointing to commodity producers. They also look for safe investments, dividend stocks, and some cheap consumer staples to add to their stock fund.

Chris's portfolio, consisting mostly of deep-value commodity producers, tends to perform well during inflationary periods, which is our current situation. With a looming recession, many investors follow Chris's lead.

Very little Cash

During a stock market crash, it is common for investors to panic sell their stocks and hold onto traditionally safe investments instead. Those who invest with borrowed money (leverage) may also sell their gold and bitcoin to cover their market positions due to recessions. As a result, there is usually a significant decrease in the value of all assets, including those affected by interest rates.

Knowing where to invest your money is important during a stock market crash. If you have cash saved up, it may be tempting to keep it in your bank account.

However, investing in commodity-producing stocks, precious metals, and Tbills can potentially yield greater returns for the near-to-intermediate future.

However, this may not be the best strategy for long-term growth (3-5 years), especially with market volatility the way it is. It is important to consider safe investments for retirement to ensure outperformance.

Smart investors know they can put their cash back to work by allocating a percentage of their portfolio to safe dividend-producing investments like blue-chip stocks, which can withstand market volatility and market crashes, and inflationary assets such as commodities.

These stocks, funds, and Tbill investments do well during economic uncertainty and recession, as real things people need are often seen as a hedge against inflation.

Commodity producers include gold miners and streamers, silver miners and streamers, oil producers, and agricultural products (Fertilizer stocks) that can be smart investments with potential growth over the next 10-years.

By investing in sound investments that make sense, such as commodity-producing stocks, precious metals, and Tbills, you may be able to protect your portfolio from the effects of a stock market crash and potentially even see some gains.

Researching and consulting with a financial advisor before making any investment decisions, especially in safe investments such as annuities and stocks, is important to ensure the best interest of your investment.

Expect inflation to persist throughout the next ten years amidst a stock market downturn.

According to Ray Dalio, we are currently experiencing a breakdown of a long-term debt cycle that has lasted 80 years. This breakdown may lead to a recession, making it crucial for investors to consider safe investments. We consider real stuff that people NEED to be a safe investment.

During a recession, governments and their central bank counterparts may not take a practical approach to manage their debts, causing investors to flock towards safe investments like T-bills.

Instead, during times of recession, they use creative fiscal and monetary policy approaches. They rely heavily on the money printer and financial engineering to make the economy work or at least appear to work. To protect themselves, investors often look for safe investments such as T-bills.

Historically, these situations end in disaster, and only time will tell when this will happen. It is not a matter of if but when.

During a stock market crash, investing in certain assets can help you minimize your losses and even make gains.

One of the best investments during a stock market crash is gold. Gold is considered a safe-haven asset because it retains value during economic downturns.

Real estate is a safe investment during a recession and stock market crash because it is a tangible asset that can provide steady cash flow through rental income and annuities.

Also, real estate prices are more stable than stocks during economic downturns. Investing in defensive stocks is another way to protect yourself during a stock market crash.

Defensive stocks are safe investments that provide essential goods or services that people need regardless of the state of the economy, making them a reliable option during a recession.

Additionally, these stocks can be considered for annuities as they offer stability and consistent returns.

For example, safe investments such as annuities and companies that produce consumer staples like food and household items tend to be defensive stocks during a recession because people will always need these products regardless of how the economy is performing.

Finally, investing in yourself during a stock market crash and recession can be one of your best investments. This means improving your skills and education or starting a business.

Additionally, considering annuities as part of your investment strategy can provide stability during uncertain economic times. Doing so can secure a steady income stream for the future.

What Causes Inflation?

Many investors are aware of the current inflationary state of the economy, but some still debate whether this is a temporary situation that requires safe investments.

However, taking a broader view reveals that central banks have been inflating the economy for years without proper deleveraging, which means that any future economic downturns will likely be severe and long-lasting. It is, therefore, important to consider safe investments to protect oneself from potential losses.

Inflation will probably persist significantly rather than being short-term, so finding safe investments is crucial.

The primary cause of current inflation is the massive stimulus spending by governments worldwide, combined with supply disruptions triggered by the poor response to the pandemic. As a result, many investors are turning to safe investments to protect their assets.

As a result, trillions of currency units have been printed and injected into the economy, causing people to seek out safe investments.

The Upcoming Commodities Super Cycle: A Wise Investment During Stock Market Crashes

Chris believes that we are entering a commodities supercycle, which is good news for deep-value investors with a long-term investment horizon and looking to diversify their investments into real stuff.

However, for those of us living in the real world, a commodity supercycle means that inflation will increase significantly, making everything more expensive. This can affect investments in various ways.

This investment trend has already started and is expected to continue for the next decade.

Chris warns that this inflation will not be short-term, so investors should not feel too late to participate in this commodity bull trend.

A commodity supercycle is a prolonged period of rising commodity prices driven by increasing demand for raw materials, making it an attractive investment opportunity.

This trend has historically lasted for several years and can benefit investors who invest in the right commodities, such as gold, silver, copper, oil, agricultural products, and other investments.

However, as Chris points out, this trend also leads to higher inflation rates, negatively affecting consumers' purchasing power and investments.

Higher inflation rates mean that the cost of goods and services increases over time, leading to a decrease in the value of money which can affect investments.

Therefore, it is essential to consider investments that can hedge against inflation during a commodity supercycle. One such investment is typically real estate.

Real estate investments provide an excellent hedge against inflation since property values increase during inflationary periods.

Additionally, real estate investments generate rental income that can increase with inflation.

Another investment option is dividend-paying stocks. Investments in dividend-paying stocks provide investors with regular income payments that can help offset the effects of inflation.

Additionally, companies that pay dividends tend to be more stable and profitable investments than those that do not.

Finally, gold is an excellent investment option during a commodity supercycle since it tends to retain its value during inflationary periods.

Gold is often viewed as a safe-haven asset during economic uncertainty and can provide investors with a hedge against market volatility. With its long-term stability, gold investments can be wise for diversifying their portfolio.

Which Commodities Should You Invest In During a Stock Market Crash?

Investing in commodities is smart for 2023, especially if you're concerned about a possible stock market crash. Commodities are physical goods that can be bought and sold, such as gold, silver, oil, and agricultural products. These investments can provide a hedge against inflation and diversify your portfolio.

These sub-sectors of the commodities sector are particularly promising for investments.

We recommend avoiding the commodities futures market but instead looking for commodity producers and buying their shares.

1. Precious metals: Gold and silver are considered safe-haven assets because they tend to hold their value during times of economic uncertainty. Investing in these metals can provide a hedge against inflation and currency devaluation.

2. Energy: Oil and natural gas are essential resources that power the global economy. Despite fluctuations in demand, these commodities are expected to remain in high demand for years to come.

3. Agriculture: Food is a basic necessity of life, and investing in agricultural commodities like corn, wheat, and soybeans can provide a stable source of returns.

As the global population grows, demand for food is likely to increase, making agricultural commodities a smart long-term investment for those seeking profitable investments. Consider fertilizer stocks as a synthetic bullish play on agriculture.

By diversifying your portfolio with commodity producers (equities and not futures contracts), you can reduce your exposure to big stock market corrections and protect your wealth from market volatility over time.

Include these sectors in your portfolio for diversity during a stock market crash.

• Agriculture

• Base Metals

• Copper

• Gold

• Natural Gas

• Offshore Oil

• Rare Earths

• Russia Oil & Gas

• Shipping

• Uranium

What to Invest In During a Stock Market Crash

During a stock market crash, finding investment opportunities that will yield positive returns can be challenging.

However, there are some strategies that investors can use to help them identify potential investments. One option is to seek out specific stock recommendations from experts in the field.

For example, Rebel Capitalist Pro offers model portfolios and premium macro investing newsletters by Lyn Alden and Chris MacIntosh.

Another strategy is to invest in commodity producers outside of Western countries. This can be particularly beneficial in the energy sector, as developing countries often rely heavily on fossil fuels.

By conducting thorough research into these companies and their operations, investors may be able to identify growth opportunities even during a market downturn.

Additionally, many developing countries are struggling with high levels of debt, which could impact the profitability of commodity producers operating within those nations.

Ultimately, researching and seeking expert advice is the key to finding successful investments during a stock market crash.

By carefully analyzing market trends and identifying industries with strong growth potential, investors may be able to identify opportunities for long-term success even amidst economic turmoil.