The thought of a plunging stock market is likely to sends shivers down the spines of many investors. However, for those taking a long-term view, a full-blown crash could provide an opportunity to buy quality stocks at knockdown prices.
Let’s consider what might happen over the remainder of 2026.
What are the chances?
According to Coinbase’s prediction market, 68% think the FTSE 100 will hit 11,000 this year. Of course, this doesn’t mean it will happen but it hints at positive investor sentiment.
Indeed, just before the war in Iran started, the Footsie briefly broke through this barrier. When the conflict is (hopefully at some point) behind us, the index could return there.
Inevitably, when looking at market movements, it’s events on the other side of the Atlantic that could have the biggest impact. Fortunately, the US economy appears to be in reasonable shape, certainly compared to many in Europe.
One useful indicator is the CBOE Volatility Index, or VIX as it’s commonly known. This is a measure of expected volatility in the S&P 500 over the next 30 days. It’s based on actual options prices so it should be accurate. But it doesn’t predict market meltdowns. Instead, it provides an indication of short-term market sentiment.
Currently (15 July), it’s reading 16.35. A figure of 15–25 implies a normal level of market uncertainty. In October 2008, it peaked at just under 90 as a result of the global financial crisis. All appears calm at the moment.
Overheating?
Yet an AI boom is a cause for concern with many predicting a crash similar to the dotcom bubble. But Goldman Sachs suggests these fears are overplayed, commenting: “Unlike… in the late 1990s, corporate profits have risen to new highs rather than deteriorating, the current account deficit has narrowed, and corporate balance sheets have remained stable.”
History tells us that there will be another crash but nobody knows when, let alone whether it will happen by Christmas. There’s no harm in preparing for the worst while hoping for the best. This might involve holding a little more cash than normal to take advantage of post-crash bargains, or adding a more defensive shares to a portfolio.
Something to consider
Whether the market crashes or not, London Stock Exchange Group (LSE:LSEG) will continue to make money from share buying and selling. Other defensive characteristics include its data analytics division charging annual subscription fees, which makes its revenue less vulnerable to the normal economic cycle. Its share price also tends to be less volatile than the wider market.
But there are risks. It has seen a drop in high-profile IPOs in recent years. And fears have been expressed that the group could suffer from cheap AI models diminishing its competitive advantage.
My view
However, AI need loads of data, which the group has in abundance.
Also, its blue-chip customer base is less price sensitive than others, with financial institutions relying on accurate information above all else.
Interestingly, the recent pullback in the group’s share price means — relative to earnings — it’s comfortably below its five-year average.
On balance, I think it’s a stock to consider, regardless of whether investors think a market crash is coming or not. It’s definitely on my watchlist for when I’m next in a position to invest.
Should you invest £5,000 in London Stock Exchange Group Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if London Stock Exchange Group Plc made the list?
James Beard does not hold positions in any of the companies mentioned.
