A bear market — or stock market crash — is a fall of a fifth (20%) and more from a previous record high. In my 35 years of investing, I’ve witnessed four major stock market crashes (1987, 2000-03, 2007-09 and March 2020). Yet I’ve survived them all and made handsome profits during recent meltdowns. It’s as investing legend John ‘Jack’ Bogle said, “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks”.

With US stocks looking volatile in 2022, many investors fear another stock market crash. But should they? Here are five numbers from the worst day in US stock market history. That day was 19 October 1987, known as Black Monday.

Stock market crash: 1) 508.32 points

On Black Monday, the Dow Jones Industrial Average index plunged right from the open. By the close, the Dow Jones had lost 508.32 points — in a single day. When this news came through via radio, TV, and newspapers, I was utterly shell-shocked. This stock market crash was like nothing ever seen. Stock prices plunged across the board, driven lower by automated program trading and market liquidity drying up. To put this shocking plunge into context, this points fall was almost five times as large as any previous one-day loss.

Market meltdown: 2) 22.6%

On 18 August 1987, the Dow Jones hit a record closing high of 2,722.42 points. It then started to sag. On Friday, 16 October, the index lost 108.35 points (4.6%) to close at 2,246.74. That represents a loss of 475.68 points from August’s peak. That’s a slump of almost 17.5% from the high. But in Black Monday’s stock market crash, the Dow Jones collapsed by almost a quarter (-22.6%) in just one day. In percentage terms, this was roughly twice as large as any daily fall seen before or since. More like Down Jones than Dow Jones, right?

Bear market: 3) $500bn

Black Monday set multiple records for stock market crashes. For example, trading volume that day of 604.4m shares was a massive record back then. Also, the one-day loss of market value was a record $500bn. To put that loss into context, today Apple is worth around $2.79trn. That’s about 558 times as much as Black Monday’s loss of market value. So although the catastrophic collapse on Black Monday seemed apocalyptic at the time, it’s a tiny sum in today’s markets.

Stock market crash: 4) $1bn

At the time of Black Monday, the world’s richest man was Sam Walton, founder of giant US supermarket chain Walmart. Walton, a multi-billionaire at the time, heard the news of the stock market crash late in the day. On hearing that he had lost perhaps $1bn in a single day, Walton apparently shrugged off this news and vowed to concentrate on his fast-growing business. Walton died in 1992, but his seven heirs are worth perhaps $250bn today. Wow.

Market recovery : 5) 36,952.65

After this colossal stock market crash, pundits warned investors to steer clear of buying stocks and shares. Wrong, very wrong! On 24 August 1989, 23 months later, the Dow Jones closed at 2,734.64  points, exceeding its record high set just over two years earlier. On 5 January 2022, the Dow Jones closed at an all-time high of 36,952.65 points — over 21 times Black Monday’s close of 1,738.41 points.

For me, there’s a clear lesson here. Stock market crashes are usually followed by recoveries and even fresh booms. Therefore, I buy when there’s blood in the streets — even if it’s my own!

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.

From a high point in November, Scottish Mortgage (LSE: SMT) has seen its share price fall more than 30%. Over the past year, the former market darling has seen a share price decline of 22%. Given its heavy tech weighting, I think ongoing market turbulence could see the Scottish Mortgage share price fall even further.

But as an investor, assessing a share for my portfolio means involves two different possible sources of financial gain. One is the capital gain – or loss – based on what I pay for a share today versus its future sale price. But a second is its dividend yield. In SMT’s case, the dividend is something I think investors often overlook.

SMT: growth and income

Shares often get bucketed into growth or income categories. SMT is primarily seen as a growth share. That is mainly because its portfolio of investments is concentrated in fast-growing companies like Tesla and Amazon. It also reflects the trust’s own punchy price history. The recent performance may not look good, but over the past five years the Scottish Mortgage share price has more than tripled.

But although I admire its track record of investing in promising growth shares, SMT also offers me some income potential. In fact, a lot of investors do not realise that this dynamic, future-looking trust has been in existence for 113 years. Scottish Mortgage has a stellar record of consistently paying dividends. The last time it cut its dividend was in 1933. Past performance is not a guide to what will happen in future. But that record does make me wonder what the income prospects might be like for me if I bought Scottish Mortgage shares today.

Low yield

Although the Scottish Mortgage dividend has not been cut since before the war, it is not that big. Last year, for example, it paid 3.42p per share. That was a 5% increase and this year’s interim payout is also up 5%. But in absolute terms, the dividend level remains small.

That comes into focus when expressing the dividend in terms of yield. The strong share price growth at Scottish Mortgage in the past few years far outpaced dividend growth, leading to a shrinking yield. The current SMT dividend yield is just 0.3%. That would be a welcome bonus to me if I owned the shares. But it alone would not motivate me to invest in SMT from an income perspective.

Impact of a falling Scottish Mortgage share price

As dividends increase and the share price falls, the yield available to me on SMT shares moves up. It still seems low at 0.3%, but if there is a sizeable further downwards move in the SMT share price, the yield could yet reach a level I find attractive.

On top of that, I think SMT may keep increasing its dividend in future. As some of its growth shares see their early stage businesses mature, they may start to pay dividends in the way Apple did. That might give SMT extra cash it could distribute to its own shareholders as dividends.

I am not ready to buy yet, as I expect further market turbulence may affect its investments. But I am keeping an eye on the Scottish Mortgage share price – and its yield.

Christopher Ruane has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Over the past decade, not many shares have increased in value by 1,000%. One that has come close is the parent company of Google, Alphabet (NASDAQ: GOOG). Its shares are 800% higher than they were 10 years ago. That means the per share price is now in the thousands of dollars. To combat that, Alphabet has announced plans to split the shares. Does it make sense for me to buy Alphabet shares now for my portfolio,  or ought I to wait until after the share split is complete?

What is a share split?

Imagine that I had a healthy shrub I liked in my garden. Over the course of some years, it gets so big that it becomes hard for me to manage. Instead, I split it into a number of smaller shrubs, which I can move to different places more easily.

That is the thinking behind share splits. When a share reaches a high price, it makes it harder for an investor to buy it because the cash outlay is so high. Splitting the share into 20 new shares, which is what Alphabet plans to do, means that each new share is much less valuable individually, making it more affordable. As a shareholder, although I would own more shares, my percentage stake in the company stays the same.

Alphabet share split

In Alphabet’s case, the split could also make the shares eligible to be included in the Dow Jones index, which they are not at the moment. That could increase demand from tracker funds, possibly boosting the share price.

There is some academic evidence that share splits can increase the marketability of a company’s shares. But that will not necessarily happen. After all, the company remains the same and my percentage stake in it as a shareholder would be unchanged, even if I end up owning more shares after the split. There are also some inconveniences to a shareholder following a split, such as trying to calculate capital gains. But in general, a share split should not negatively affect the overall value of my holding in a company.

Alphabet has been performing strongly. Indeed, that is probably why it plans a share split. The share price is up 30% in the past year alone. The company’s revenue grew 41% last year and earnings per share growth was 93%. Properties such as YouTube should help the company continue to post strong growth, in my view.

I would buy Alphabet shares

There are risks. Such high growth rates are hard to maintain. The costs of developing new revenue streams could eat into profits. Alphabet’s size means regulators could seek to take a chunk out of profits, by fining it or indeed pushing to break it up.

But I think this is a top class company and would be happy to buy its shares for my portfolio. A share split makes no difference to my view of the company’s prospects. I see no compelling reason to wait until after the split to make my move. I would consider buying Alphabet shares today.

Christopher Ruane has no position in any of the shares mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Alphabet (A shares) and Alphabet (C shares). Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should I buy shares in FTSE AIM incumbent Emis Group (LSE:EMIS) for my holdings? 

IT healthcare business

Emis provides healthcare-related software services for general practice (GP) surgeries around the UK. One of its key products is Patient Access, which is a platform offered to patients to book appointments as well as request prescriptions and access general medical information. It also played a role in supporting the NHS during the pandemic using its Outcomes4Health platform to support the vaccination rollout.

As I write, Emis shares are trading for 1,258p. At this time last year, the shares were trading for 1,122p, which is a 12% return over a 12-month period.

Should I buy this FTSE stock?

FOR: I always look at a stock’s performance track record. I do understand that past performance is not a guarantee of the future, however. Looking back, I can see Emis has consistently performed well in terms of revenue and profit for the past four years. Coming up to date, it released a post-close trading update at the end of last month. Emis reported growth compared to 2020 levels and confirmed a couple of new acquisitions. It also mentioned its healthy cash balance and a generally robust balance sheet. Full results will be due next month.

AGAINST: Emis shares look a bit expensive at current levels. They are trading at a price-to-earnings ratio of close to 28. This tells me that growth could already be priced in. Furthermore, any negative news or a drop in performance could send the share price on a downward trajectory.

FOR: Emis operates in a market whereby the products it sells aren’t the type to be replaced regularly and there is a high likelihood of repeat custom. I call these “sticky” software solutions and these are embedded into a GP’s infrastructure. This could help boost performance and growth. Emis also pays a dividend with a yield of 2.5%. This is higher than the FTSE AIM and FTSE 250 averages. I do understand dividends can be cut or cancelled, however.

AGAINST: The healthcare software market is extremely competitive. There are many players vying for market dominance. I also believe the recent pandemic has exacerbated the need for cutting-edge software to help healthcare providers operationally and provide patients with technological solutions to help complete day-to-day tasks. Emis could see its market share affected, which could then affect performance and any returns.

My verdict

There is a lot to like about Emis in my opinion. It has a long history and good track record of performance as well as the fact it pays a dividend to help me make a passive income. It has a good footprint in the UK and is growing via acquisitions and organically too.

I would add Emis shares to my holdings. I believe it is one of the best stocks for me to buy on the FTSE AIM index currently and I am keen to see full-year results next month.

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Emis Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

If I had some spare money and decided to start investing for the first time, I think one of the things that might be put me off is not knowing where to begin.

Below are some common pitfalls when people start investing – and one way I would seek to avoid falling into them if I had only £300 to invest.

Pitfall 1: greed

Most people invest in the hope of financial return. But greed can be what dooms an investment.

If I owned a cross-section of the stock market overall, I could hopefully benefit over time from any improvement in the broad economy. But I would miss out on the potentially stellar returns of an individual industry pioneer. That greed tempts many people to put their money into speculative companies with unproven business models. Sometimes that turns out well. But it could be a costly mistake even with £300, if I invest in a company with an unrealistic assessment of how it is likely to perform in future.

Pitfall 2: understanding valuation

One way I find companies in which to invest is using a product or service I like a lot then deciding to invest in it. That was part of my rationale for investing in Apple and Google owner Alphabet before.

But a good and even highly profitable business does not necessarily make for a rewarding investment. That is because other investors may also see the potential in a business and rush to buy its shares, pushing up the price. So the shares may be overvalued by the time I buy them. That can mean that, even though my thinking about the business growing fast turns out to be correct, I still lose money on the shares.

Pitfall 3: lack of diversification

The adage against putting all our eggs in one basket is familiar. But when it comes to investing, some people ignore it – potentially putting their whole investment at peril. The temptation can be strong, for example because one is so excited about the prospects for a particular share. Also, while a big portfolio lends itself to being spread across different investments, dealing costs could mean that if I invest only £300, it can be difficult for me to diversify cost effectively.

But risk is risk — and could wipe me out. I think diversification is a critical risk management for an investor, no matter how much or little they have to invest.

I would start investing in an index fund

Those three pitfalls help explain why, if I was to start investing today, I would consider putting the £300 into shares of an index fund that tracks a selection of leading shares, such as the Vanguard FTSE 100 index Unit Trust.

That would not offer me the potential returns of an industry pioneer. But it would expose me to a diversified collection of businesses that by and large ought to move roughly in line with the economy overall. That means I could still lose money if the market overall is overvalued. But I would not need to spend lots of time considering the valuation of individual companies without really knowing yet how to do it. My objective would not be excitement – or even very high financial returns. Instead, I would be focussed on learning about how shares work while trying to manage the risks to my £300.

Christopher Ruane has no position in any of the shares mentioned. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Alphabet (A shares), Alphabet (C shares), and Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

2021 was a great year for the Royal Mail (LSE: RMG) share price, which rose by a pretty big 50%. I bought it late last year, and for a time at least, it was a great stock to hold. Its share price soared and its share buyback was fairly good too. However, 2022 has not started on such a good note for me as an investor in the FTSE 100 stock. In the last month alone, it has fallen some 16%. Along with the gains from the share buyback, it has still been a good buy for me so far. But if its share price continues to fall, this might not be the case a few months from now. 

So here, I ask this question: how are Royal Mail’s stock market fortunes likely to play out in 2022? 

Why has the Royal Mail stock price fallen?

First things first, why has the stock fallen? The decline started in mid-January, possibly in response to delayed deliveries during the holiday season. The Omicron variant resulted in the absence of 15,000 staff. The share price stabilised after the company released its trading update in the last week of January. This showed that, while its performance in the final quarter of 2021 might have been dented compared to the year before, it was higher than that seen in the last comparable pre-pandemic period of 2019.  

Dirt-cheap FTSE 100 stock

But here is what makes the stock really interesting to me right now. At its present share price, it has a price-to-earnings (P/E) ratio of 5.2 times. Let me put this in context. The average FTSE 100 stock trades at 16 times. If that does not make Royal Mail dirt-cheap, I do not know what does! Oh no, wait. Its share price is also 10% lower than it was last year. It is even lower than the highs seen in mid-2021. And is definitely lower than the highs seen back in 2018 when the company’s trade union went head-to-head with its management. And this is when the company’s financials look pretty decent to me. 

Favourable structural winds

There is more. The pandemic has improved the long-term prospects for the stock. It plays a crucial part in the growth of the e-commerce industry, that has really come into its own during the lockdowns. In fact, it is now believed that the segment’s growth has been accelerated for good. And it even has a decent dividend yield of 3.8%. This is higher than the FTSE 100 average of 3.4%, which counts for something in my view. 

My assessment

So, in sum, there is a lot going for the Royal Mail stock. It is super cheap and has solid long-term prospects. Its dividends are the icing on the cake. It has seen a tumble in price recently and faced some challenges during the holiday season, but I see that more as a bump in the road than a structural problem. I think it is only a matter of time before its price starts rising. I continue to like the stock and am ready to add to my current holdings. 

Manika Premsingh owns Royal Mail. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

A real estate investment trust (REIT) is an example of an excellent dividend stock, in my opinion. One REIT I am considering adding to my holdings is Regional REIT Ltd (LSE:RGL). Here’s why.

What are REITs?

A real estate investment trust is a business with a property portfolio setup to yield income from these properties. These can be many forms of  properties such as warehouses, offices, shopping malls, and many others. REITs offer investors access to a property portfolio without having to purchase and manage the property. REITs are designed to pay the majority of profit as dividends which is why they are identified by many as a good dividend stock option.

Regional REIT’s portfolio is mainly commercial property and is wholly based in the UK. It is made up of office buildings and industrial units in regional centres of the UK outside of the M25 motorway. As at June 2021, Regional has 151 properties, 1,214 individual units, and 847 tenants.

As I write, Regional shares are trading for 88p. At this time last year, the shares were trading for 76p, which is a 15% return over a 12-month period.

Risks involved

Regional could fall foul of changing working habits as well as soaring inflation and rising costs. Firstly, the pandemic has led to many firms offering home working options. This has continued as restrictions have eased. Regional owns many office buildings. Demand could decrease, affecting performance and making it a less attractive dividend stock.

With rising costs due to soaring inflation, economic uncertainty could be bad news for REITs like Regional. These issues can affect occupancy, but more importantly, rent collection from existing tenants. This was a widespread issue when the pandemic struck and the market crashed. This would affect performance and payouts.

A dividend stock I’d buy

Regional currently sports an enticing dividend yield of just over 7%. To provide some perspective, the FTSE 250 average yield is just under 2% and the FTSE 100 average yield is 3%-4%.

One of the reasons I feel Regional is a good option for my holdings is its track record of performance, as well as track record of finding excellent properties and making deals to benefit the company. For example, last year it sold a portfolio of units for £45m, which was 18% higher than what it purchased the units for. There is no guarantee that Regional could repeat such successes but I like to see that management has an eye for growth and profitable deals.

Regional has also performed well in recent years. I do understand that past performance is not a guarantee of the future, however. I can see revenue and gross profit increased year on year for three years prior to the pandemic-affected year of 2020. Full-year 2021 results are due soon and I am confident pre-pandemic levels could be achieved.

Overall I believe Regional is an excellent dividend stock with a good track record, and an enticing average-beating yield. For this reason, I’d add the shares to my holdings to make a passive income.

Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Key points

• Gold can be a safe investment during turbulent times
• Polymetal International is underpinned by strong profits and earnings
• The Veduga mine is expected to produce 200,000 ounces of gold for 21 years

Recently, a lot of attention has been given to the prospect of a stock market crash. At its most basic level, this essentially involves a mass sell-off of stocks. Concern has grown from the poor share price performance of technology stocks, like Facebook owner Meta. This stock has fallen 31% since the beginning of February, and 18% in the past year. Indeed, the NASDAQ 100 index is down 11.5% since the start of 2022, despite rising 6.6% in the last year. I think I’ve found a FTSE 100 gold stock, Polymetal International (LSE: POLY), to mitigate any potential crash. Let’s take a closer look. 

Gold for a stock market crash

Getting exposure to gold can be a great way to plan for a serious downturn in equity markets. It is generally a safe haven during difficult times. Indeed, it could be argued that gold and stock markets are negatively correlated. While gold rises on panic and crisis, equity markets rally on economic growth.

While gold, as a commodity, may perform well during a stock market crash, it is worth noting that gold stocks may not. This is because they are stocks themselves and may get caught up in any sell-off. Within equity markets, though, I still think gold stocks are the best way to prepare for a stock market crash.

A FTSE 100 gold stock  

A gold and silver mining firm, Polymetal International operates mines across Russia and Kazakhstan. Company results tell a story of solid and consistent growth. For the calendar year 2016, earnings per share (EPS) stood at just ¢90, increasing to ¢228 for the same period in 2020. By my calculation, this shows a compounding annual earnings growth rate of 20.4%. Needless to say, the business is going in the right direction. 

What’s more, the company is predictably profitable. Profits before tax nearly trebled between the calendar years 2016 and 2020, growing to $1.4bn. As a potential investor preparing for a stock market crash, these results give me a great deal of reassurance.

A recent trading update for the three months to 31 December 2021, however, stated that capital expenditures had risen 5%. Some of this was due to purchasing excavators and trucks for new mining projects. The update also cited the continued risk posed by the pandemic, with some absences due to infection.

Nonetheless, management is focused on growth and expansion. Last month, it announced $471m investment in the Veduga mine in northwest Russia. This operation, so we are told, should yield 200,000 ounces of gold per year for 21 years. Consequently, the firm should be able to increase production in the coming years.

If we find ourselves in a stock market crash, I think gold is a good investment. Gaining exposure to this commodity through companies like Polymetal International is not without its risks. Overall, though, I think the underlying growth and profitability of this company would likely see me through turbulent times. I will be buying shares now.

Andrew Woods has no position in any of the shares mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Some of my holdings are purely dedicated to dividend paying stocks that make me a passive income. One such stock I am considering adding is Primary Health Properties (LSE:PHP).

Healthcare properties

Primary Health Properties is a real estate investment trust (REIT) that specialises in the ownership, development, and rental of modern primary healthcare facilities in the UK and Ireland, such as GP surgeries.

As a quick reminder, a REIT is a company set up to make money from income-producing properties. Investors gain exposure to the real estate market by buying shares in a REIT, and REITs gain access to capital that can be used to purchase more property and grow. What I like about REITs is that they must return a large chunk of profits as dividends. I think REITs are excellent stocks to buy to make a passive income, although I do understand that companies can cut or cancel dividends at any time. 

As I write, PHP shares are trading for 135p. At this time last year, the shares were trading for 10% higher at 149p. Macroeconomic factors such as soaring inflation and rising costs have pressured all FTSE shares recently, so I’m not worried about the share price dip.

Risks

Primary Healthcare Properties could see its portfolio and uptake affected by the burgeoning virtual healthcare market. Recent technological evolution has led to a spike in these new services that mean patients with a smartphone or laptop can access primary care facilities. As digital transformation continues, I’d expect more of these services to lead to fewer people physically attending GP surgeries. This could affect dividends and any passive income.

Another risk of note for PHP is that government guidelines around healthcare and regulations could change. This could put a cap on any rents and profits that firms like PHP could make. This would affect performance and any return I hope to make.

A great passive income option

At current levels, PHP shares look cheap to me with a price-to-earnings ratio of just 13. In addition to this, it sports an enticing dividend yield of over 4%. The FTSE 250 average yield is just under 2%, which means PHP offers over double this amount.

I understand that past performance and dividend record are not a guarantee of the future. However, I like to look at them when determining investment viability. Looking back, PHP has lifted yearly dividends for 25 years in a row! Coming up to date, analysts reckon the yield will surpass 5% in 2023. Yesterday’s interim report made for excellent reading too with revenue, profit, and dividends all increasing compared to the same period last year. Continued performance like this would boost dividend payments and any passive income.

PHP shouldn’t have collection issues as the government pays the rent on its facilities. In addition to this, the ageing and rising population means that need for medical facilities will likely continue to increase in the years ahead.  There is also a shortage of medical facilities, meaning PHP is in a unique position to continue acquiring and renting out properties, and in turn, growing organically.

Overall, I believe PHP is one of the best stocks for me to buy now to make a passive income. I’d happily add the shares to my holdings.

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Primary Health Properties. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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