Why It's Time to Prepare for a 2018 Stock Market Crash

The Dow Jones is on a record-setting run, but that doesn't mean a 2018 stock market crash can't happen. And smart investors are always prepared for the worst, even when the market is soaring...

The Dow opened today (Monday, Oct. 16) at a record-high 22,931.39, as the second-longest bull market ever stretches to nearly nine years. While the soaring highs have been great for investors - the Dow is up 245% since March 2009 - that doesn't mean the next stock market crash is years away.

2018 stock market crash

We aren't expecting the market to fall - we actually think it can run even higher - but no one can predict a stock market crash with any precision. That's why it makes sense for investors to plan ahead, even if stocks are soaring to record-breaking heights.

And to help you plan, we're showing you a few stock market crash warning signs to keep an eye on. Plus, we have some of the most resilient stocks to own, which could help you protect your money during a market crash...

Stock Market Crash Warning Signs to Look Out For

There are two warning signs we can point to that might ground your expectations about the soaring market.

First, Business Insider reported that Wall Street analysts are growing concerned over the stock market's low volatility.

That might sound counterintuitive, since we often consider low volatility to be a good sign for the markets. But the analysts' reasoning is that with volatility falling so low, it has nowhere to go but up. In other words, since the stock market tends to move in cycles of ups and downs, reaching one extreme might be a sign the markets are about to change direction.

According to the CBOE Volatility Index (VIX), volatility hasn't been as low as it has been this year for more than 20 years. Volatility, in short, is at an extreme point.

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Second, the U.S. Federal Reserve is hiking interest rates, and that could reduce the amount of money going into the stock market.

You see, the Fed drastically lowered interest rates to combat the financial crisis of 2008. Between 2007 and 2008, the Fed slashed rates from over 5% to 0.25%, its lowest rate ever.

The idea was to inject more money into the economy by making it easier for businesses to borrow money. When interest rates are low, businesses can borrow money at the low interest rates and use it to grow.

While businesses did borrow more money, they used it to repurchase shares of their own stock, boosting their companies' stock prices.

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Between 2008 and 2016, publicly traded companies borrowed $1.9 trillion while buying $2.1 trillion of shares of their own stock. That's part of the reason stock prices have been growing.

But now the Fed is set on raising interest rates again. They've hiked rates four times since 2015, and the CME FedWatch Tool shows they are likely to raise rates one more time in 2017. With rates now over 1% for the first time since 2008, they could potentially rise above 2% for the first time since the same year in 2018.

That means less borrowing, since borrowing costs are rising, and that could pull some money out of the stock market.

While these indicators don't mean the stock market will crash, they are reasons investors can't afford to be complacent even if stocks are soaring. Fortunately, there's a way to prepare for a market crash without fleeing the stock market entirely.

Here are three of our most resilient stocks on the market; stocks that can grow even if the market is tumbling...

How to Prepare for a 2018 Stock Market Crash

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Money Morning Chief Investment Strategist Keith Fitz-Gerald thinks investors should hold on to stocks in the "Unstoppable Trends." The trick to making huge profits is to find "must-have" companies that fall into these six Unstoppable Trends: medicine, technology, demographics, scarcity and allocation, energy, and war, terrorism and ugliness (also known as "defense"). The Unstoppable Trends are backed by trillions of dollars that Washington cannot derail, the Fed cannot meddle with, and Wall Street cannot hijack.

By owning well-run companies in these "Unstoppable Trends," you'll own resilient stocks that will charge out of any market downturn, leaving behind anyone who sold off stocks for other assets. And if the market doesn't correct, these stocks are still going up.

That's why we're bringing you three of our favorite stocks from the Unstoppable Trends.

Raytheon Co. (NYSE: RTN) is our play for the trend of war, terrorism, and ugliness.

Raytheon is a leader in the defense industry, with billions in contracts with the U.S. government and other countries across the world. That means if the market falls, Raytheon is going to continue to excel over the long term.

Raytheon has billion-dollar contracts with the U.S. government, but it also has a diverse customer base. International customers make up just under half of its business. That means even if a few countries cut defense spending during an economic downturn, RTN still has plenty of other customers to help it weather the storm.

But RTN's real allure as an Unstoppable Trend pick is the fact that war is a reality of the world. For instance, as tensions rise abroad, the United States is more likely to need more weapons and equipment. When the United States launched a missile strike on a Syrian airbase on April 7, Raytheon's stock jumped more than 2%, since its missiles were used.

RTN currently trades at $188.46 a share and pays a 1.69% dividend yield. RTN is up 32.75% this year.

Becton, Dickinson and Co. (NYSE: BDX) is an example of a play in the Unstoppable Trend of demographics.

BDX is a healthcare company specializing in one-time use medical products utilized in hospitals and long-term care facilities. That means, as populations age, more people will need this type of medical care, and BDX will be in even more demand. People will need healthcare whether the market falls or not.

But BDX is also an exceptionally well-managed company. It has a 10.54% profit margin and maintains a 1.58% dividend yield, even after a $12.2 billion takeover of CareFusion two years ago. That means the company's capital management is sustainable and will easily survive a market downturn. And that's good news for its shareholders during a stock market crash.

BDX trades at $200.69 and pays a 1.45% dividend yield. BDX is up 21.18% year to date.

Microsoft Corp. (Nasdaq: MSFT) is a leading company in the Unstoppable Trend of technology.

The reality is that technology is here to stay; individuals and businesses across the world rely on it to function. Microsoft is a well-managed company and is a leader in the tech industry. That means MSFT will bounce back after a downturn.

Microsoft is also constantly innovating to stay on top of the tech world. Businesses and individual consumers are increasingly relying on cloud storage to manage their daily lives. And Microsoft's new Azure cloud platform is poised to fend off its rivals by integrating Microsoft software, something CEO Satya Nadella calls "software as a service." So, even if the market dives, Microsoft services are still going to be in demand. Its Azure cloud computing service is now the second-largest cloud service in the world.

MSFT trades at $77.58 a share and pays a 2.17% dividend yield. MSFT is up 24.87% on the year.

Seventeen Triple-Digit Winners This Year... and Counting

Keith Fitz-Gerald's Money Map Report subscribers who have followed along with his recommendations are now sitting on 17 triple-digit winners this year - including a 201.68% return and 132.35% gain that closed out in the same week.

Each week, Keith shows everyday Americans how to tap into the world's biggest high-profit trends, ahead of the crowd.

There's nothing complicated or overly risky - and no guesswork involved.

Right now he's looking at another double-your-money opportunity, and there's still time to get in on it. Find out how to subscribe and access all of Keith's recommendations by clicking here now.

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