Quick context before the detail: after soaring 282% is this blue-chip the best share to consider buying if markets crash in november? sits at the intersection of a few real-world decisions most readers face at some point. Here is a clear summary of what is going on, and why it matters.
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It’s a brand-new month and I’m looking for the best share to buy in November. Yet this is a tricky time to be an investor. Lately, we’ve had repeated warnings about a potential stock market crash. Many think artificial intelligence will be the trigger. They say AI is in a bubble. That we’re looking at the dotcom boom and bust all over again.
Will the FTSE 100 fall?
That always happens at this time of year. October has history. The Wall Street crash happened in October 1929, as did the Black Monday meltdown in 1987. So investors can get a little antsy.
Yet instead of crashing, the S&P 500 climbed 1.92% last month, while the FTSE 100 shot up 2.87%, to close at 9,717.25. What bubble? What bust?
Of course it could still come. There’s no rule that says markets can’t crash in November, although they have developed a habit of surging in the final two months of the year. With the US Federal Reserve cutting interest rates last week, and potentially cutting again on 10 December, this bull market could have further to run.
The truth is, nobody knows. It’s impossible to predict a crash, so ignore those who try. There is one thing investors can do though. Buy cheap shares after it’s happened.
If we do get a sell-off, or even a volatility-fuelled dip, the first stock I would check out is Barclays (LSE: BARC). The FTSE 100 bank’s shares have had an absolutely brilliant run lately (as have the other blue-chip banks). Barclays is up 71% over the last 12 months, and 282% over five years. All dividends are on top.
Like the other banks, it’s had to claw its way back to respectability after the financial crisis, but the job seems to be done now.
There are more safety barriers today, with stricter capital requirements, but we can’t rule out further problems in this sector.
When concerns about the $4.5trn US shadow banking system popped up last month, Barclays dipped, only to recover when investors decided there was nothing in it, for now.
Barclays is expanding
Unlike Lloyds and NatWest, Barclays has retained an investment banking division, giving it exposure to the lucrative US market. That means it could run hotter in good times, but fall faster when investors panic.
It’s exploring other areas too. Last Monday (27 October) it secured a Saudi Arabian investment banking licence, continuing its Middle East expansion. On Tuesday, we learned it’s buying US personal loan platform Best Egg for $800m.
Its foreign ventures increases the risk compared to, say, Lloyds, which is now purely domestic, but also increases the potential rewards. There’s something else to consider. The big banks could be targeted with a windfall tax in the Budget on 26 November.
Long-term perspective
If markets do turn volatile, as they inevitably will at some point, Barclays could be hit harder. Investors might consider buying it at a reduced valuation, with the aim of holding long-term to allow the cycle to swing back in its favour.
Yet with a price-to-earnings ratio of just 11.3, Barclays looks good value today. Maybe not the very best, but it’s worth considering even if markets don’t crash. Although investors might want to wait to see what the Budget brings.
