Last month, the Dow underwent the largest intraday drop in market history, falling more than 1,600 points in one trading session. With more volatility on the horizon, many investors are wondering if it's possible to predict a stock market crash.
Despite Wall Street's confidence, predicting stock market crashes is incredibly difficult. In fact, it's not possible to do it accurately.
But that doesn't mean investors can't protect their money from the next market crash...
While you might not be able to know when the next stock market crash is coming, Money Morning is preparing investors with a stock market protection strategy that will protect your portfolio from the downturn. In fact, our strategy can set you up for profit when the markets fall.
Here is what you need to know about the possibility of a stock market crash in 2018 and how you can protect your investments...
Why a Stock Market Crash in 2018 Could Happen
While we aren't predicting a stock market crash, there are a few signs that the bull market might not be as strong as it appears.
You see, the U.S. Federal Reserve is expected to raise interest rates up to four times in 2018 alone.
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Over the last decade, the Fed has kept interest rates low in an attempt to spur economic growth in the wake of the Great Recession.
Many companies, betting on continued access to this "cheap money," have borrowed aggressively, and analysts have made aggressive projections about their future growth based on low interest rates.
As a result, rising interest rates may reveal that the market is overvalued due to heavily leveraged companies offering overly ambitious growth projections.
And there's even a historical metric that suggests this is already the case. The Shiller Price-Earnings (P/E) ratio is a common measure of the stock market's value relative to earnings. Today, it stands at 33.20, which is over 97% higher than its historical average.
The only time it has been higher than the current level was in 1999, shortly before the 2000 tech bubble burst.
While that doesn't mean the market will crash now, it's a sign that investors can never be too complacent about the future of the market.
This is why we strongly recommend that investors take action now to safeguard their cash with a reliable stock market protection plan.
You see, the trick to protecting your portfolio is to find "must-have" companies that fall into what Money Morning Chief Investment Strategist Keith Fitz-Gerald calls the 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.
Let's take a look at two stocks that align with Keith's "Unstoppable Trends" and can protect your portfolio during stock market crashes.
In fact, these two stocks actually produced positive returns for investors after that infamous 2000 tech market crash...
Buy These Two Stocks to Protect Your Portfolio During a Stock Market Crash
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Raytheon Co. (NYSE: RTN) is our top pick for the Unstoppable Trend of defense.
A world leader in cybersecurity and defense, Raytheon has made billions of dollars in both international and domestic defense contracting. The company's diversified global presence means that an American economic crisis will have a limited impact on demand for Raytheon's expertise and products.
In addition, the company's role in the defense industry guarantees that it will remain profitable no matter what the economic conditions are. Regardless of the stock market, there will still be international conflicts that require the resources and services of Raytheon - that's why it's considered an "Unstoppable Trends" company.
Shares of RTN trade at $212, however, analysts see the company heading as high as $265 - a 25% gain on today's price.
Keith's other favorite profit play is Becton, Dickinson and Co. (NYSE: BDX), a stock that falls in the Unstoppable Trend of demographics.
BDX specializes in single-use healthcare products that are purchased and used by medical facilities around the world. With a majority of the world's population growing older, demand for these products will soar regardless of what's happening on Wall Street.
BDX is known for its solid capital management - just two years ago, it completed a $12.2 billion purchase of the healthcare company CareFusion. The company's strong management allows it to produce a 10.54% profit margin and pay a 1.58% dividend yield.
Right now, you can buy BDX for around $217. Though much like Raytheon, analysts see BDX hitting $265 in the future - a strong 22% gain.
Buying BDX and RTN can help your portfolio profit during a recession. But it's not the only great profit play Keith has found. Keith has been researching even more aggressive income potential, too. He's found a special class of investments he calls "26(f) programs," which give investors the opportunity to tap into huge monthly income - $2,000... $5,000... or more - every month for the rest of their lives. Click here to learn how it works...
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