How to invest in the stock market during a recession? (U.K)
The world is currently in the mist of a virus epidemic which has created uncertainty in the stock market and caused a massive decline in share prices.
If you already had a share portfolio you would have seen thousands of paper losses as stocks plummeted over the past couple of weeks!
Is the world over or is this the greatest time to invest in the stock market??
I firmly believe this is one of the greatest times to invest in the stock market.
In the words of the great billionaire investor Warren Buffet
“Be Fearful when others are greedy and greedy when others are fearful”
“Observe the masses & do the opposite” says millionaire investor James Caan from dragons den.
This market crash is the perfect opportunity to heed those words of wisdom!!
When others are being fearful its your time to strike.
Stock prices are at a all time low, these bargain prices mean investing now should give you great returns in the future.
Timeline of Stock market crashes:
The stock market is no stranger to crashes, the global stock market sees a crash approximately every 10 years with four historic market crashes in the past century.
From the great depression in the 1930’s
To the Dot Com Crash in the early 2000’s
To the 2007 credit crunch and 2008 Financial Crisis.
Heeding his own words of advice he was greedy while others are fearful.
How can you take advantage of this situation?
While if you already had a shares portfolio you would have seen thousands of paper losses wiped from your account during this latest market crash.
However, this losses only become real IF YOU SELL!
The key is to NOT SELL during these times.
The simple fact is to BUY LOW & SELL HIGH! But as many people are very emotional they tend to SELL LOW & BUY HIGH!
So hold on for the long term as the market always corrects.
What if you have some cash to invest?
If you have some cash to invest then now is PRIME TIME! You can start investing from as little as £10.
There are a variety of FREE TRADING PLATFORMS which charge you ZERO fees and offer an extensive list of many great funds & shares to get you started.
TWO of my favourites are FREE TRADE & TRADING 212.
I will leave a link in the description where you can sign up & get a free share when deposit & sign up.
What should you invest in?
Now I am not a financial advisor & you should assess your own personal circumstances.
However, having said that I will tell you my method of selecting companies to invest.
I follow the same strategy as the greatest investor in the world, warren buffet.
He observes companies with the following:
Great Cashflow & Strong balance sheet
Market leaders in there industry such as Coca Cola, Microsoft, Apple, Google,Amazon.
Low Debt which makes them more able to withstand recessions & crashes.
And last but not least the most important investment right now.
Buffet selects companies which are BELOW MARKET VALUE.
Buffet compares the stock market to a bipolar person who wakes up every morning feeling different & the slightest issue can send him into a deep depression.
This can cause some companies to be wrongly undervalued, but as the market corrects there true value is seen.
Which are the best investments for beginners?
But remember don’t follow what I do because I could be wrong & the timing I purchased shares will be different to your purchase.
instead follow my method.
THE FIRST & MOST SAFE INVESTMENT I did was in a INDEX FUNDS.
INDEX FUNDS are widely regarded by many professional investors as the safest, most passive & lowest cost form of investment.
These funds have even been known to OUTPERFORM many professional investment firms.
So if you want somewhere to put your money and forget about in then an Index fund is for you.
If your in the U.K The FTSE 100 ETF offers a diverse Collection of the top 100 companies in the U.K
The FTSE 250 offers a list of top 250 smaller companies in the U.K.
These are at historic lows right now so are great investments to start off.
For worldwide diversification,
You should definitely check out the S&P 500 this is the top 500 companies in the USA which is the worlds biggest economy so it makes sense to have some exposure to this.
The S&P 500 will give your investment access to well known brands such as Apple, Google, Amazon, Facebook and many other large market leading businesses.
The S&P 500 has been on the longest bull market run in history which began in 2009.
Since then it has seen a 330% rise!! Which offered great returns for many investments.
However, it has been knowledge for a while that share prices were valued higher than earnings, so a market contraction was predicted.
Now due to this latest crash, the S&P 500 dropped to more reasonable level, still high but a crash will definitely give you an opportunity to get your foot in the door.
Index funds are the best place to start for anyone looking to take advantage of the investing opportunities.
So feel free to use the link below for a free share & to get started! Now is one of the greatest times in history.
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For higher risk investment’s, but with potentially higher rewards. You can also invest in individual companies.
During the next video I’m going to reveal my portfolio of stocks I’ve invested in during this latest crash. I am going to detail how I evaluated the companies and some useful tools to use.
If you found this video informative feel free to like comment and definitely subscribe!
Lloyds Bank was founded in 1765 in Birmingham, U.K.
It began when John Taylor, a button maker, and Sampson Lloyd, an iron producer joined forces
. They started a bank called Taylors and Lloyds which served manufacturers and merchants.
Lloyds continued expanding throughout the Industrial Revolution and by the 20th Century, Lloyds Bank had acquired many smaller banking groups in the U.K before expanding internationally.
These days Lloyds bank has over 30 million customers and is well regarded as one of the big boys of the U.K banking Industry.
Lloyds share price has fallen nearly 60% since the start of the year. Which is a staggering drop that far exceeds the 30% average for the FTSE 100 index.
The announcement that the banks would suspend their dividends also didn’t help the situation.
Is the Bank doomed? Or Could this be a great turnaround investment?
IN this video I’m going to give you a full analysis of the stock and detail whether this could be a great investment opportunity.
Central banks around the world have unlocked trillions of dollars of funding and liquidity to make sure the financial system holds together in these tough times. So far, these actions seem to be working.
Reduced interest rates and more liquidity will make it easier for the bank to borrow and lend.
The bank’s price-to-earnings ratio now sits at 8, massively lower than just a few months ago.
How did Lloyds Bank perform during the Financial Crisis?
In the 2008 financial crisis, Lloyds TSB was hit hard as were the other banking institutes.
Problems at HBOS (Halifax Bank of Scotland) led to a catastrophic fall in share price and the HBOS boss was about to FAIL!
However, this is where Lloyds came out stronger. Although it
went against the rules of the monopolies commission, the government allowed Lloyds Bank to take over Halifax Bank of Scotland.
This acquisition made the Lloyds banking group the largest holder of mortgages in the UK.
The U.K Governement then Bailed out Lloyds with a £20.3bn bailout and the secured 43% in the business.
In 2017 in the U.K government finally sold it’s shares in the Business.
Lloyds Bank SCANDALS?
LLOYDS banking group has battled many scandals over recent years from allegations that the bank ruthlessly mistreated customers as it scrambled for survival during the financial crisis.
This led to a £45.5 million fine for the failure of its Bank of Scotland arm to tell the City watchdog about suspicions of fraud at its now-notorious Reading branch.
According to the guardian, The proceeds of this fraud were spent on Prostitutes and parties!
Now although £45.5 million isn’t a lot for the large banking instates the stigma is still there.
Then there was the PPI( payment protection insurance) which affected many British banks in which they had to repay £53.3billion!
Lloyds was the biggest seller of the dud product!
Now despite these scandals Lloyds bank had battled and recovered, it’s share price was looking healthy up until this latest stock market crash.
While it’s unlikely any of these lenders will escape unscathed from the outbreak, they’re still in a far better position today than they were in 2008/09.
FINAL THOUGHTS:
Overall, UK banks are in a much stronger financial position than they were back in 2008 during the financial crisis. Where many had to be bailed out.
In this case, the 2020 stock market crash doesn’t lie with the banks and this global issue has been the catalyst for the economic uncertainty and market volatility.
If Lloyds can preserve its capital, the bank should be in a feasible position to continue lending to small businesses.
However, with the prospect of many companies having to file for bankruptcy as a result of this global issue, could eat into the bank’s profits…which is a risk.
However, on balance if Lloyds can continue to support businesses in a sustainable and cash-efficient way, there’ll be no need for bailouts or any government support.
It’s extremely low share price at the moment offers a margin of safety for this purchase thus I bought shares in Lloyds.
You should also check out my previous video in which I analysed Barclays bank shares which are some of the cheapest in the FTSE 100 right now with upwards returns of 300% possible!
Barclays shares offer even better value than Lloyds. Check that video out below,
What do you think of Lloyds Bank group as a Business and as a stock?
COMMENT BELOW
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———————–FINANCIAL ADVICE DISCLAIMER. (FROM BACLAYS VIDEO **********************************************************************************
BUT REMEMBER THIS IS NOT FINANCIAL ADVICE SO PLEASE DO YOUR OWN RESEARCH, evaluate your own investing goals, budget and risk tolerance before investing into any stocks mentioned on this channel!
I will leave you with a banking joke,
A local bank is introducing a cash machine built in to a tree. If it’s successful, they might expand to other branches!!
Due to the recent global issue the economy has been halted and the stock market has took a major hammering!
Is this the end of the world? Or is this the greatest time to invest in the stock Market?
WATCH THE FULL VIDEO BELOW!
WHAT DO GSK DO?
Glaxosmithkline is a pharmaceuticals giant based in the U.K and is part of the FTSE 100 index. GSK’s share prices have recently plummented along with the rest of the stock market so this could be a great opportunity to get your foot in the door on a safe investment, this is ideal if you are a more risk adverse investor.
As defensive shares such as food, drinks and Pharmaceuticals are ideal to balance your portfolio as people will always need these items even if there is a recession.
The business model of GSK is relatively simple for an industry which is constantly innovating & can be quite complicated.
As a science-led global healthcare company it researches and develops a wide range of innovative products in areas of Vaccines, Pharmaceuticals and Consumer Healthcare to commercialize them in more than 150 countries around the world.
GSK even developed the first Malaria vaccine and also holds intellectual property on many medicines.
GlaxosmithKline also has a reliable dividend yield of 5%.
It’s share price has plummeted recently and although a P/E ratio of 18 is not as cheap as other riskier investment sectors, consistent sales revenue & profits over the past several years is a great sign!
So could this be the perfect time to add this Pharmaceuticals giant to your portfolio??
In this video we are going to find out, I’m going to do a full stock analysis into GSK and detail whether I think it is a good investment and tell you whether I PERSONALLY have invested in them or not.
LETS DIVE IN!
GSK Business Strategy?
GSK stands out in the pharmaceutical community and got heavy criticism from the investors, due to their new strategy to focus on selling “low price-large volume” drugs in emerging markets instead of most common practice of selling “high price-low volume” products in the US and Europe .
In an industry where cutting edge biotech start-ups get lots of attention and many pharmaceutical companies are re-designing their R&D operations to catch-up with new & even more complicated levels of innovation,
GSK is decided to keep things simple!
GSK Chief Executive Sir Andrew Witty chose to swim against the tide by defining his vision as “A simpler, stronger and more balanced platform for long-term growth”
A major pillar of this new business strategy was simplifying the three components of the operating model in alignment with the new vision. (SCREENSHOT OPERATING MODEL)
Recent Epidemic?
In terms of battling the recent epidemic Glaxosmithkline has joined with French giant Sanofi to work together and try & develop a coronavirus vaccine.
Now It’s very risky to investment purely in a company with the expectation that it may one day develop a vaccine for the latest virus. Now you may be right & make a lot of money or you may be wrong. But To me that is not investing that is SPECULATION.
However, in GSK’s case the business is established, proftiable & reputable so even if they don’t create the vaccine, it’s no major issue, it would just be a nice BONUS if they did.
As GSK also produce many other corona virus related products including pain killers, vitamins, supplements and of course testing kits.
DEEP DIVING INTO THE STOCK! (Screen capture video )
SHOULD YOU BUY SHARES IN Alliance pharmaceuticals??
Due to the recent global issue the economy has been halted and the stock market has took a major hammering!
Is this the end of the world? Or is this the greatest time to invest in the stock Market?
WATCH THE FULL YOUTUBE VIDEO BELOW!
WHAT DO ALLIANCE PHARMA DO?
Alliance Pharma is a small cap pharmaceutical company listed on the FTSE AIM 100 index.
FTSE AIM 100 index the Alternative Investment Market (AIM) which is a sub-market of the London Stock Exchange that allows smaller companies to access capital from the public market.
Alliance Pharm is an attractive investment ideal for the risk adverse investor. It’s low risk business model makes it’s a great defensive stock to add to your portfolio.
As people will always require pharmaceuticals if there is a recession or not.
Alliance Pharma owns or licenses the rights to more than 90 pharmaceuticals and consumer healthcare products, and generates sales over 100 countries.
Lots of Alliance pharma’s products are sold in a limited number of local markets and require little or no promotional investment, meaning it’s marketing costs are rock bottom.
However, as it has been proven via multiple studies that people will pay more for consumer healthcare products which have a strong brand, Alliance pharma is building a portfolio of what it calls “International Stars”
These are consumer healthcare brands with significant international or multi-territory reach. These brands benefit from promotion and strategy growth.
Alliance Pharma’s share price plummeted recently as it follow the rest of the stock market, despite it’s business not been directly affected negatively by the issue.
So could this be the perfect time to add this Pharmaceutical growth stock to your portfolio??
In this video we are going to find out, I’m going to do a full stock analysis into Alliance Pharma and detail whether I think it is a good investment and tell you whether I PERSONALLY have invested in them or not.
LETS DIVE IN!
Alliance Pharmaceuticals was established over UK 20 years ago and now a significant international healthcare group..
Marketing over 90 products in over 100 countries and employing over 200 people internationally.
Recent years have seen a broadening in the scope of Alliance’s product portfolio.
As Warren Buffett says “Be sure you understand a business before investing into it”. Alliance pharma offers a breath of fresh air in the ever changing and increasingly complex pharmaceutical industry.
Efficient Business Model?
They use an efficient business model which allows them to focus on activities where they can deliver the greatest value.
Their primary expertise lies in the marketing and management of their products and working collaboratively with their team, customers and partners.
They have an asset-light business model in which they outsource capital intensive activities such as manufacturing, storage and logistics.
(Operating model screenshot)
This them frees the business up to focus on Acquisitions of new innovative products.
DEEP DIVING INTO THE STOCK! (Screen capture video )
I also did a recent video on the Pharmaceticals giant GLAXO SMITH KLIne, This is an established FTSE 100 company, which has great growth potential and is also working on a vaccine for this latest virus!
The FTSE 100 has taken a real hammering due to the global epidemic & economic implications.
Barratt Developments plc is one of the largest residential property development companies in the U.K. It operates via network of over 30 divisions and was founded back in 1958 as Greensitt Bros, before control was taken by Sir Lawrie Barratt.
Barratt’s share price plummeted by over 50% from it’s February high, due to this latest stock market crash. However, this stock was one of the first to rally by over 35% in just a few days/
This suggests that Barratt developments could be one of the first stocks to spearhead the FTSE 100 recovery.
Could this be a great opportunity to get yourself on the FTSE 100 property ladder?
In this video, we are going to find out. I’m going to deep dive into the stock and inform whether I have PERSONALLY purchased shares in Barratt Developments.
LETS DIVE IN (From Alliance pharm (Hip Hop)
Dividend Cancelled?
Property development companies are going through a tough time right now with Redrow, Berkeley group & Crest Nicholson all cancelling or scaling back dividends!
Barratt developments also cancelled it’s dividend to save itself £100 million in cash flow.
The business also suspended all financial guidance and shutdown all construction sites, sales centres & offices.
Barratts has also paused all land purchases, recruitment & non essential capital expenditure.
However, it is continuing to pay suppliers & sub contractors.
Previous Financial Crisis?
FTSE 100 property developers are in a much stronger position than during the 2008 stock market crash.
According to Barratts investor statement:
“We are in a position of strength, with a robust balance sheet, a highly skilled workforce and an experienced board”
Will the property market recover?
The real question is could we be facing a double dip stock market crash or are we set for a healthy & rapid V shaped recovery.
As consumers will be shaken by this incident & may not wish to purchase a new property for at least a few years.
Despite the rock bottom interest rates on mortgage borrowing.
However, as the U.K housing market is very resilient & at it’s core there is an EXCESS IN DEMAND of Supply, then the rules of economics should favour Barrett developments in the long term.
Overall, Barratt developments is an a healthy position to whether this storm. It’s balance sheet show’s it has plenty of cash on hand to pay all of it’s debts easily.
The companies management has also exercised capital discipline in cutting any unnecessary expenses.
As the economy recovers, the rules of supply & demand will reign true.
People will always need housing in the U.K & as the property market recovers.
Barratt developments should reinstate its healthy 7% dividend.
I predict this company to be one of the first to spearhead the FTSE 100 recovery!
Live Nation Entertainment (NYSE:LYV) is the world’s largest promoter of live events, it operates over 270 venues from theatres to arenas). It also has the Ticketmaster platform.
They also own 4/5 of the largest music festivals in North America.
Back in 2016 live nation has over 71 million people grab a ticket to one of their shows.
Of course the global pandemic & social distancing issues have affected almost every business in a negative way.
However, the situation is particularly bleak for live events in massive arenas.
With major festivals such as Tomorrowland being cancelled already for the year 2020, it’s hard to imagine, that people will be encouraged to refill these major arena’s so soon after these strict social distancing measures have been in place.
So with Live Nations stock at rock bottom & the future of concerts & major events remaining uncertain!
Would it be crazy to invest into Live Nation?
Billionaire Mark Cuban doesn’t think so & publicly voiced his purchase of shares in the business.
(VID 1 Mark Cuban Live nation purchase) 11:30 mins in.
Could this stock double in the next few years? Or is it just too risky to invest in?
In this video we’re going to find out, I’m going to do a full analysis of the stock & assess the wider impact that this pandemic may have of large social gatherings in the future!
LETS DIVE IN!
Will Things get back to normal?
The mass social distancing laws have had a major economic impact & although I don’t believe this is a permanent situation. How fast a recovery will be is uncertain.
Many economists have spoken of a possible “traffic light” system in which low risk businesses & activities are presumed. Such as restaurant access with less than 10 people etc.
Given these theories the Live events & festival industry will have one the toughest times to recover.
These means it’s also one of the most risky places to invest!
Now despite Billionaire mark Cuban investing into Live Nation during this global pandemic, he has actually voiced many concerns about how & if things will get back to normal.
So it seems Mark Cuban is contradicting himself or perhaps back tracking on his initial investments.
As he has investing money into shares yet is voicing major concerns about gatherings of people.
As the owner of the Dallas Mavericks basketball team he has predicted games initially just in front of the camera & essential people.
Could this stock double in Price?
So could this stock double in price!
Live Nation was once a stock market hero, previously it had climbed from a price of just $10 per share at the start of 2013 to over $70 per share at the start of 2020.
Driven by the growth of the concert attendance industry & the consumer trend in which people prefer to spend money on experiences over physical possessions.
Concerts & live events are the perfect place for a memory social gathering.
Live events & touring also affects musicians earnings massively, recording artists making the vast majority of their money from live music concerts. According to research from the Music Industry.
As they don’t make as much from the digital streaming platforms such as spotify.
This trend has led to an increase in the number of concerts which has further bolstered Live Nation’s revenue growth.
Although it’s difficult to put a clear date on when live events industry will resume, the consumer demand is still strong & thus many analysts have predicted this industry to return at some point.
The real question is WHEN? 1 year, 2 year, 5 years. And
What will that look like? Social distance seating? Rigorous cleaning schedules? Temperature checks upon entry?
Does Live Nation have high DEBT?
Before investing into any business during a recession period you must know the levels of debt the business has & if it has sufficient cash flow to cover it’s liabilities. In other words check the BALANCE SHEET!
In 2019 Live Nation had $3.3 billion in debt outstanding and $2.5 billion in cash.
This compares to $773 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) generated during 2019.
You must consider how much earnings the company has which can go toward paying interest and debt retirement costs.
It may appear that Live Nation has a enough amount of cash on hand and earnings to accommodate its debt load.
However, as earnings in 2020 will likely be hampered or potentially non-existent this puts the business in a risky situation.
In addition, the cash held by live nation isn’t cash the company can keep –
For example,
$837 million of it is related to tickets sold for events that have not yet occurred and charges owed to clients.
There is a strong possibility that many of those events may be cancelled, which means that the cash would have to be refunded to customers.
The good news is Live Nation doesn’t have any major debt maturities in 2020 & most likely has enough cash on hand to whether this storm!
This global pandemic could not have come at a worse time for Live Nation. The spring, summer, and early autumn months are Live Nation’s most popular seasons.
The business actually operates at a loss during the first and fourth quarters, & then makes up for these losses with strong profits during the second and third quarters.
With the 2nd & 3rd Quarters uncertain, this makes this stock very risky.
However, due to this recent epidemic how long this business takes to recover is still uncertain. Although It’s share price is 29% below it’s fair value which does offer a margin of safety.
For me this is still a business to keep your eye on, an investment now could pay off big time but I personally will hold out on this one for now & keep up to date with managements outlook for it’s business during the 2nd & 3rd quarters.
Do you think the live events industry will recover?
