I’m an Investing Expert: 3 Best Stocks To Buy When Everyone Else Panics About Falling Prices

The stock market is known for its volatility. Analyzing data from the S&P 500, the Schwab Center for Financial Research found that the stock market experienced a decline of at least 10% in 10 out of the 20 years from 2002 to 2021. Despite this, stocks ended up rising in the majority of these years and saw positive returns in all but three of those years. The average return during this period was 7%.

The FRED has also analyzed the S&P 500 over time. While there have been some notable dips, such as in March 2020 and September 2022, the stock market has seen an overall climb. This is good news for long-term investors, but it could be stressful for short-term investors or those with less risk tolerance.

With such volatility in the stock market, you might be wondering which stocks to buy when everyone else is panicking about falling prices. GOBankingRates spoke with Kris Mullins, seasoned serial entrepreneur, investor and the chief marketing officer at Capital Max , to get his thoughts on what to look for when choosing stocks, which ones to invest in and how to get started .

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Go for Blue-Chip Stocks

If prices are falling and the market as a whole appears to be in turmoil, look for companies with strong fundamentals — and a history of weathering economic downturns.

“The safest investments are frequently blue-chip stocks with solid fundamentals and a track record of enduring economic downturns during market downturns,” Mullins said. “Solid balance sheets, steady cash flow and market leadership are the main reasons why companies like Apple, Microsoft and Johnson & Johnson usually manage to stay resilient. These stocks are great to buy when others are panicking because they tend to recover quickly as investor confidence returns.”

By definition, blue-chip stocks are shares from well-known — and well-established — companies with steady growth over a long period of time and market capitalization. Many of these stocks also pay dividends, which is great for those looking for extra cash flow or who want to reinvest their returns.

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Apple (AAPL)

Apple, Inc. designs, manufactures and sells smartphones, tables, personal computers, laptops, wearable tech and accessories. It also produces digital content, streaming services, licensing services and more.

The company first launched in California, but it now operates on a global scale. This includes the Americas, Japan, China, Taiwan, India, Australia and many European and African countries.

As of August 23, 2024, Apple was worth around $226 a share — with minor fluctuations throughout the day. According to MarketWatch , Apple’s one-year performance is up 26.57%. It’s three-month performance is up 18.99%.

Microsoft (MSFT)

Microsoft Corp is another tech company that primarily develops software, devices, services and solutions. It’s been a major player in technology for a long time, prioritizing acquisitions and diversification to thrive and grow even in periods of market downturns. Microsoft owns many companies, including LinkedIn, Activision Blizzard, GitHub, Skype and OpenAI.

The company was founded in 1975 in Redmond, Washington. It now has offices around the world — from Argentina to Afghanistan to Samoa to Luxembourg.

As of August 23, Microsoft was worth about $415 a share — with some fluctuations throughout the day. According to MarketWatch , it’s seen a three-month dip of 3.63%. However, it’s also up by 28.35% over the past 12 months.

Johnson & Johnson (JNJ)

Johnson & Johnson is a multinational pharmaceutical, medical technologies and biotechnology company based in New Jersey. As a multinational company, it operates in over 60 countries worldwide.

The company has several notable segments, including Innovative Medicine and MedTech. The former focuses on research and development of things like neuroscience, oncology and infectious diseases. The latter prioritizes developing solutions to restore mobility and vision, as well as providing life-saving surgical technologies, among other things.

On August 23, Johnson & Johnson was worth about $162 a share. MarketWatch reported that it saw a 10.77% increase over the past three months. However, it’s had a 2.08% decline over the past 12 months.

Some Tips on Investing In Stocks

Companies like Microsoft, Apple and Johnson & Johnson all have strong market presence and diverse revenue streams. This makes them better equipped to handle short-term or temporary market downturns than less established companies. It also means they’re more likely to recover in the event of such a market shift.

Still, investing in stocks can feel complicated — especially if you’re new to it. So, how do you get started?

“The best course of action for novices is to stick to your strengths and invest in businesses whose goods and services you are familiar with and confident in,” Mullins said.

Mullins also suggested diversified index funds since these can expose you to a larger variety of stocks and reduce overall risk.

“Before making an investment, it’s also critical to investigate and evaluate a company’s financial standing, including its debt levels, dividend yield and P/E ratio,” he said.

What You Should Do in a Stock Market Decline

Rather than panic and sell your holdings, you might want to hold or even buy when the market declines.

“In general, it’s preferable to buy or hold during a market decline as opposed to selling,” Mullins said. “Buying opportunities arise from market corrections frequently, enabling you to purchase high-quality stocks at a reduced price. Buying or holding during a panic can set you up for gains when the market recovers, but selling during a panic locks in losses.”

Whatever else, Mullins advised against making rash decisions and instead focusing on your long-term goals.

This article originally appeared on GOBankingRates.com : I’m an Investing Expert: 3 Best Stocks To Buy When Everyone Else Panics About Falling Prices