Do not fear volatility; be prepared to see it as a potential opportunity.

When a highly leveraged, speculative asset like Bitcoin experiences a sharp decline, it can indeed trigger a chain reaction that spills over into the broader stock market.   This is very plausible and well-understood cascade effect, often referred to as a "liquidity crunch" or "contagion." 

Your mindset of preparation is the correct one for a seasoned investor. Instead of fearing volatility, the prepared see it as a potential opportunity to acquire high-quality assets at a discount.

Here is a structured framework and a list of hypothetical stock categories and examples that investors often have on their watchlists for a market downturn. This is for informational and educational purposes only and is not a recommendation to buy any specific security.

The Prerequisite: Your "Shopping List" Criteria

Before looking at any names, it's crucial to have a set of criteria. In a panic, emotion can take over. Your list should be your rational guide.

1. Strong Balance Sheet: Look for companies with low debt (or manageable debt), high cash reserves, and strong free cash flow. This allows them to weather an economic storm and even gain market share.

2. Durable Competitive Advantages (Moat): Companies with powerful brands, patents, network effects, or cost advantages that are unlikely to disappear in a recession.

3. Proven Profitability: A history of consistent earnings, not just revenue growth. Profitability is a sign of a sustainable business model.

4. Essential Products/Services: Businesses that sell things people need, not just want. Demand for their products is "inelastic."

5. Attractive Valuation: Even a great company can be a bad investment if you overpay. A market downturn is the time when these companies might finally hit your target buy price.

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A Hypothetical "Watchlist" for a Market Downturn

Here are categories of stocks, with well-known examples, that often fit the criteria above. This is a starting point for your own research.

Category 1: The "Defensive" Pillars

These companies are considered non-cyclical. Their businesses are relatively immune to economic cycles.

• Consumer Staples:

  • Procter & Gamble (PG): Sells everyday essentials like Tide detergent, Pampers diapers, and Crest toothpaste.

  • Coca-Cola (KO): A globally recognized brand with a vast distribution network. People don't stop drinking beverages in a recession.

  • Walmart (WMT): Benefits from its "low-price" leader position as consumers become more price-conscious.

• Healthcare:

  • Johnson & Johnson (JNJ): A diversified healthcare giant with pharmaceuticals, medical devices, and consumer health products. Healthcare is a necessity.

  • UnitedHealth Group (UNH): The largest health insurer in the U.S. Its services are integral to the healthcare system.

  • Pfizer (PFE): A leading pharmaceutical company with a portfolio of essential drugs and a strong pipeline.

Category 2: High-Quality Tech & Innovation (At a Reasonable Price)

A downturn could be a chance to buy into the long-term winners of the digital age that were previously too expensive.

• Cloud & Infrastructure:

  • Microsoft (MSFT): A behemoth with diverse revenue streams (Cloud via Azure, Office, Windows, LinkedIn). Its products are deeply embedded in the global economy.

  • Amazon (AMZN): Dominant in e-commerce and cloud computing (AWS). AWS is a profit engine, and the core e-commerce business is increasingly essential.

• Semiconductors (The "Picks and Shovels"):

  • ASML Holding (ASML): Has a virtual monopoly on the extreme ultraviolet (EUV) lithography machines needed to make the world's most advanced chips. A incredible technological moat.

  • Taiwan Semiconductor (TSM): The world's leading semiconductor foundry. They manufacture chips for Apple, NVIDIA, AMD, and many others.

Category 3: Strong Financials

A healthy financial sector is crucial for economic recovery. Focus on the best-capitalized institutions.

• Berkshire Hathaway (BRK.B): Not a bank, but a diversified conglomerate and insurance giant run by Warren Buffett. It's famous for holding massive cash reserves to deploy exactly during market downturns. Buying BRK.B is like hiring Buffett to invest for you.

• JPMorgan Chase (JPM): Considered one of the best-managed and most resilient large banks in the U.S.

Category 4: The "Compounders"

These are companies known for consistently growing and sharing their profits with shareholders.

• Dividend Aristocrats: Companies that have increased their dividends for at least 25 consecutive years. This is a sign of incredible financial discipline and stability. You can find lists of these companies online (e.g., AbbVie (ABBV), Lowe's (LOW), Target (TGT)).

How to Execute Your Plan When the Time Comes

1. Do Your Research Now: Don't wait for the crash to start learning about these companies. Understand their business models, financials, and competitors now.

2. Set Price Alerts: Use your brokerage platform to set alert prices for the stocks on your list. This takes the emotion out of the decision.

3. Dollar-Cost Average (DCA): In a true downturn, it's impossible to catch the absolute bottom. Consider buying in tranches (e.g., 25% of your planned position at a time) as the price falls. This averages your cost basis and reduces risk.

4. Keep a Cash Reserve: Always maintain a strategic cash reserve. The worst feeling in a market crash is to be fully invested with no "dry powder" to buy the dip.

In summary, by preparing a watchlist based on sound fundamental criteria, you are positioning yourself not just to survive a downturn, but to potentially thrive in its aftermath by acquiring wonderful businesses at fair prices.

The return of ‘Tescopoly’? How Britain’s biggest retailer dominates everyday life

Reach into your pocket and you will probably find evidence of Tesco. Whether it is a Clubcard, mobile phone or just a receipt from one of its 3,000 stores, the UK’s biggest retailer is engrained in everyday British life.

As its chief executive, Ken Murphy, proudly proclaimed this month, the supermarket chain has grabbed even more of our spending this year, landing almost a third of all grocery sales and receiving more than £1 in every £10 spent in UK retail. Data released this week showed Tesco’s sales growth outgunning its traditional rivals.

The retailer’s resurgence represents a remarkable turnaround for a business whose relentless growth across Britain through the 1990s and early 2000s was abruptly curtailed as management became too focused on overseas expansion and profits over service.

A devastating accounting scandal in 2014 appeared to close the chapter on a corporate success story that had regulators and politicians concerned about its all-encompassing dominance. Now, Tesco seemingly has its mojo back and is quietly reasserting its stranglehold on the UK market – this time in a far less visible manner.

‘Every little helps’

The term “Tescopoly” was first coined in the noughties, when concerns about the retailer – and it supermarket peers – putting local high street shops out of business were at their height.

Regulators allowed Tesco, then led by Sir Terry Leahy, to buy up the 860-store convenience chain T&S Stores in 2002, and it later marched into selling electrical goods, homewares and clothing in its out of town Homeplus stores from 2005. Tesco had already set up a banking venture with Royal Bank of Scotland in 1997 and its mobile phone service with O2 in 2003.

Huge superstores were built on the edge of towns around the country and there were concerns about it hoarding land to block rivals from setting up shop nearby and using its dominant scale to bully suppliers.

“Nowhere is it written on the sliding supermarket doors that by crossing the threshold your vibrant, distinctive local economy will begin to wither,” wrote Andrew Simms, the author of 2007’s Tescopoly: How One Shop Came Out on Top and Why it Matters.

There have been concerns down the years over the impact of Tesco’s big stores on high street rivals. Photograph: Kumar Sriskandan/Alamy

By the time Tesco tried to take on Amazon and Apple with the Hudl tablet computer in 2013, it seemed there was no area of life where the supermarket did not reach. Cafes and restaurant chains, such as Harris + Hoole and Giraffe, had been acquired to help fill the giant stores, which had become unloved.

Today, Hudl, Homeplus and even Giraffe may be just a memory of a hubristic time when Tesco had operations across the world from the US to South Korea, while regulators have since acted to prevent the holding of land to block rivals. However, with its globetrotting ventures much reduced, those close to the business say remaining the grocery kingpin in the UK and selling a wider variety of products to shoppers has become even more important.

Kings of convenience

At its peak in 2007, Tesco’s market share neared 32%, driven by huge scale and punchy marketing. Today that figure stands at 28.3%, up from as low as 26.5% in 2020. Although the figure remains some way off its high, Tesco’s new UK boss Ashwin Prasad reportedly told suppliers the retailer wants to top 30% again. Its nearest competitor, Sainsbury’s, trails well behind, on 15.3%.

https://www.theguardian.com/business/2025/oct/19/tesco-britain-biggest-retailer-dominates

Embrace the corrections, the bear markets and the crashes

Embrace the corrections, the bear markets and the crashes. 

During these times, the "baby is OFTEN also thrown out with the bath water." 

If you have prepared, these are wonderful times to ADD to your portfolio, especially buying great companies AT WONDERFUL PRICES for the long term. 

Many years after these events, you will soon realise that the lower prices you paid to own these stocks, translate into HIGHER total and compounded annual returns.

The numbers always tell the truth, eventually

In business, the numbers always tell the truth, eventually; even when management doesn't want to hear it.

Buffett

JAKS: the core business is consistently bankrupt

 

Key Observations from the Table: 

1. The Core Business is Consistently Bankrupt: The EBIT is deeply negative every single year, showing that Jaks' own operations (revenue-generating activities) are fundamentally unprofitable. 

2. The Affiliate Lifeline: The "Equity in Affiliates" is the only thing preventing the company from reporting even more catastrophic losses. In 2021 and 2022, this income was so large it created a positive subtotal before other costs were applied. 

3. What Drives the Final Pre-Tax Loss: 

1. Interest Expense: This is a massive and growing burden (from MYR 21.98M in 2021 to MYR 32.02M in 2024), consistently eating away at the affiliate income. 

2. Unusual Expenses: These were extremely high in 2020-2022, indicating significant one-off costs that further worsened the bottom line. 

3. Other Non-Operating Items: This line is volatile. The large positive value in 2020 and 2024 (likely from asset sales) provided some relief but was not enough to offset the other losses. 

4. The 2024 Story: In 2024, the affiliate income (MYR 121.6M) was almost entirely consumed by the colossal operating loss (MYR 105.8M). The remaining small profit was then completely wiped out by the high interest expense and other costs, leading to the final Pre-Tax Loss of MYR 74.7 million. 

Conclusion: This table visually demonstrates that Jaks' reported financials are a "shell game." The company's survival is entirely dependent on the paper profits from its affiliates, which are used to mask the unsustainable losses and costs generated by its core business and debt structure. 

Market drops: A 2% drop (normal fluctuation), a 10% drop (market correction), a 20% drop (bear market) and a 40% drop (severe bear market or a crash)

Summary:

How frequent are these drops?

2% drop:  common

10% drop:  one every 2 years

20% drop:  one every 5 years

40% drop:  one every 25 years

A 2% drop is a normal fluctuation within a healthy market, not a crisis. Acting on emotion is the single biggest mistake an investor can make.

A 10% drop, officially considered a "market correction," is a different beast entirely from a 2% dip. It's sharper, more painful, and the sense of panic is palpable. 

Since 1950, the S&P 500 has experienced a correction of 10% or more over 40 times. That's roughly one every two years. It's a normal, albeit unpleasant, part of investing. Every single one of them, to date, has been followed by a recovery and a new high.

A 10% correction is a test of your financial plan and your emotional fortitude. For a well-prepared investor, it's an expected part of the journey and can even be an opportunity. For the unprepared, it's a crisis. Your response should be dictated by your plan, not by the screaming headlines.

A 20% drop, officially crossing into "Bear Market" territory, is a profound psychological and financial event. The sense of fear is pervasive, and the "this time is different" narrative feels overwhelmingly convincing.

More common than most people think. Bear markets are a regular, though painful, feature of the investing landscape.

• Frequency: Since World War II, there have been 14 bear markets (defined as a 20% or greater drop from peak to trough) in the S&P 500.

• That's roughly one every 5-6 years. They are an inevitable part of the market cycle, not a bizarre anomaly.

• Duration & Severity: On average, these bear markets last about 14 months and see a peak-to-trough decline of roughly 33%.

• The Crucial Context: Recovery is the Norm. While painful, every single one of these bear markets has eventually been followed by a new all-time high. The bull markets that follow are, on average, much longer and stronger, lasting about 6 years with an average gain of over 160%.

The key takeaway: A 20% drop is a severe but normal event. It feels like the end of the world, but history shows it is a valley on the long-term path upward.

A 40% drop is a catastrophic event in the financial markets, known as a severe bear market or even a crash. These events are rare, but they are seared into the collective memory of investors because of the immense financial and psychological damage they cause.  

In the modern history of the U.S. stock market (primarily using the S&P 500 and its predecessor indices as a benchmark), a peak-to-trough decline of 40% or more has occurred only a handful of times.

Since 1900, there have been five such devastating declines:

1. The Great Depression (1929-1932): The mother of all market crashes. The stock market plummeted nearly 90% at its worst point. A 40% drop was passed early on in a long, terrifying slide.

   • Cause: A speculative bubble, a banking crisis, and catastrophic economic policy (protectionist tariffs, monetary contraction).

   • Recovery Time: It took until 1954 for the market to regain its 1929 peak—over 25 years.

2. The 1937-1938 "Recession within a Depression": After a partial recovery from the lows of 1932, the market experienced another sharp drop of about -60% from its 1937 peak.

   • Cause: Premature fiscal and monetary tightening by the government and the Federal Reserve.

   • Recovery Time: The market did not sustainably exceed its 1937 peak until the post-WWII boom in the late 1940s.

3. The 1973-1974 Bear Market: A brutal, grinding bear market where the S&P 500 fell -48%.

   • Cause: The OPEC oil embargo, skyrocketing inflation ("stagflation"), and the collapse of the "Nifty Fifty" blue-chip stocks.

   • Recovery Time: It took 7.5 years for the market to reach a new inflation-adjusted high in 1982.

4. The 2000-2002 Dot-Com Crash: After the implosion of the tech bubble, the S&P 500 fell -49%.

   • Cause: Speculative mania in internet and technology stocks with no earnings, followed by a severe recession and the 9/11 attacks.

   • Recovery Time: The S&P 500 reached a new nominal high in 2007, but when adjusted for inflation, it did not fully recover until 2013.

5. The 2007-2009 Financial Crisis: The S&P 500 plunged -57% at its nadir.

   • Cause: A housing bubble, a crisis in subprime mortgages, and a resulting global financial system meltdown.

   • Recovery Time: The S&P 500 reached a new nominal high in 2013, about 5.5 years after the peak.