Stock Market Downturn – What Should You Buy?

February 9, 2018
2663 Views

Stock market investors are worried right now. The stock market has lost all of its 2018 gains, and has suffered a downturn on a scale that we haven’t seen since 2008. Fears of rising inflation have investors selling in huge numbers, and analysts are scrambling to try and reignite confidence and reassure the public.

On the surface it looks bad, but the economy is actually in perfect health. The last time we had a recession it was more than just the stock market crashing. A number of factors came together and the stock market was a symptom of the economic downturn, rather than a major cause.

In 2018 America’s economy is in a better shape than it has been in a long time. There are more jobs, employment rates are down, and there are high reserves. Since we’re not looking at a complete collapse of things, the only way the stock market has to go, is back up.

Analysts from leading financial firms are expecting good gains by the end of the year, and some even believe stock market indexes could rebound by at least 10%. With all of this in mind, what are the best stocks to buy now that the prices are dropping?

Three Stocks That Should Recover Well After the Downturn

Investment bank RBC Capital Markets believes that the safest bets are in tech stocks, as these have shown the best recovery after previous downturns.

Broadcom (NASDAQ: AVGO) was one of the companies specifically named by the bank, Broadcom has an incredibly resilient business model, with lucrative supply contracts to other tech companies, and a significant patent portfolio. A strengthening economy will mean increased consumer spending, which should benefit Broadcom indirectly as their components are used by a significant percentage of the world’s consumer electronics manufacturers.

CDW Corp. (NASDAQ: CDW) was also recommended by RBC Capital Markets. This company provides IT solutions directly to public agencies and to corporate clients. Despite the stock market as a whole losing all of its yearly gains, CDW is performing well, with only 0.63 percent down since the start of the year. Their 12-month growth is currently tracking at 17.61 percent.

Apple (NASDAQ: AAPL) again finds itself as one of the stocks recommended by bankers and analysts. The company has dropped 8.32 percent this year, but this could represent a great opportunity for investors. The company will be bringing huge cash reserves back into the United States, is working on a new product line to accompany the iPhone, iPad, and Mac lines, and is generally one of the best performing stocks on the NASDAQ. Apple showed resilience throughout every previous downturn, and now will be no exception.

Any downturn can be worrying and even outright scary for investors. It’s important to keep things in perspective, and recognize that current selloffs are only representative of interest rate fears, and are not reflective of the strong economy in 2018. Future gains are likely to come, and buying now could be the best way to get them.

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