The markets have been behaving in some fairly erratic ways this year, in my view. For example, the FTSE 100 index of leading British shares has hit new all-time highs even though the UK economy has been looking rather sluggish.
That has got me thinking about the possibility of a stock market crash. October has seen some of history’s biggest crashes. Could the same be true this year?
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Market timing’s impossible
The answer is, nobody knows. It is not possible to time the market with absolute confidence. Instead, what investors have to do is make their own guesses about what will happen.
Those can be very educated guesses – but ultimately they are still just guesses.
I do see multiple warning signals flashing in the stock market right now that could suggest it is overvalued or perhaps is on its way to a crash. The heavy focus on just a small number of US tech stocks is one, while the dizzying valuation of some of those shares is another.
But markets can seemingly defy economic gravity for long periods. So although I see some potential indicators of a looming stock market crash, that does not necessarily mean there will be one next month – or even in the next decade.
Here’s why I’m taking action now!
So am I sitting on my hands just waiting to see whether there is indeed a crash (or a stock market correction) any time soon? No.
I have been doing a couple of things that I see as good practice for me as an investor, regardless of what actually ends up happening in the stock market.
One of those is to review my portfolio and see whether there are any shares I think it makes sense to sell at their current valuation so I can take profits off the table. In reality, I have not been doing much of that over the past few months – but I have made some sales.
Hunting for possible bargains
The greater part of my preparation for a potential stock market crash (whenever it may come) has been hunting for shares that I would be happy to own, if only I could buy them at what I see as an attractive price.
By maintaining a list of such shares, hopefully I will be ready to act immediately in the event that a stock market crash does send prices sharply downwards.
Such windows of opportunity can be short-lived, so preparation in advance is important in order to seize them.
One share I’m eyeing
As an example, one of the names on my list of shares to buy if the price moves down far enough is engineering company Spirax Group (LSE: SPX).
The Spirax share price is lower than it was at the start of 2025 – but only by 2%! That means it still trades for 31 times earnings. That is more than I would like to pay.
Spirax’s focus on commercial clients means it is not a household name. But thanks to deep client relationships, bespoke engineering products and presence in many mission-critical areas, its business model is profitable.
Weak demand in the company’s thermal solutions division remains an ongoing risk to revenues. But I will happily buy the share – at the right price.