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Don't Sweat a Market Crash -- These 7 Stocks Could Go to the Moon

By Rich Smith - May 18, 2021 at 8:16AM

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Market crashes rarely last more than a year or two -- and the stock market has been going up for 75 years.

On Friday, May 7, the S&P 500 closed at its all time high of 4,233. Five days later, on Wednesday, the stock market crash had rolled that number all the way back to...4,063.

Put down your calculators. That's a decline of just 4% -- and it's not a market crash by any definition.

In fact, you need to see a 10% decline before you can even call something like this a market correction. For a true market "crash" -- a bear market -- the decline needs to be about five times worse than the modest price rollback we've seen this week. In other words: Don't panic. We're not anywhere near a market crash -- yet.

Rocket launching to the moon

Image source: Getty Images.

Don't panic later, either

But what if this week's selling keeps on going? What if the selling continues long enough that it does constitute a "market crash"? In that case, my advice would still be not to panic.

Market corrections are scary, and they're not even all that infrequent. Since the end of World War II, the U.S. stock market has suffered more than two dozen separate market corrections, losing an average of about 14% each time, and taking about four months on average to recover. True market crashes are even worse -- both more painful (averaging 30% declines) and longer-lasting (taking 14 months to recover from). But even market crashes ultimately end. 

Need proof? When WWII ended in September, 1945, the entire S&P 500 was worth about 16 points. More than three dozen crashes and corrections later, the S&P 500 closed Wednesday at 4,063, a gain of 25,300%.

7 stocks racing to the moon

Broken down year by year, that 25,300% gain works out to the famous investing maxim that "the stock market grows 10% per year" on average. So long as you're patient, a lifetime of investing in the stock market will make you money over the long term, no matter what happens in the short term.  

To encourage that kind of long-term thinking, let me suggest for you a handful of stocks where the short term is almost certainly irrelevant -- but that could literally "go to the moon" over the long term. Let me suggest that you consider investing in space stocks.

2020 and early 2021 have seen a whole series of new stocks arrive on the stock market through special purpose acquisition vehicles (SPACs), an alternative to traditional IPOs. Over just the past few months, we've seen companies with far-reaching space ambitions announce plans to IPO via SPAC, companies like:

  • Virgin Galactic (SPCE -4.26%), a pioneer in space tourism.
  • Rocket Lab, the leading manufacturer and launcher of small rockets carrying small satellites, which is going public with help from Vector Acquisition (VACQ).
  • Astra, another small rocket launcher that is being brought public by Holicity (HOL).
  • Momentus, a maker of "space tugs" that tow satellites into new orbits, with Stable Road Acquisition (SRAC) as its SPAC.
  • Spire Global (Earth observation satellites), going public via NavSight Holdings (NSH).
  • BlackSky (geospatial intelligence and data analytics), courtesy of Osprey Technology (SFTW).
  • And AST SpaceMobile (ASTS -4.24%), which wants to turn every cellphone on the planet into a satellite phone that can call to anywhere, from anywhere.

According to the latest data from S&P Global Market Intelligence, not one of these space companies is currently profitable. Some haven't even put anything in space yet, and it could be months or years before their businesses truly get up and running. What the market does -- whether it crashes or soars -- probably doesn't mean very much to such early stage companies.

To be perfectly honest, I think it might be as long as a decade or more before we'll know which of these stocks will become winners, and which not. But by the time we do know, my hunch is that the winners could cost very much more than the $10 or so they cost today -- and that the gains from those winners could more than offset the losses of the losers. 

As speculative investments, I wouldn't advise placing a whole lot of money into any single space stock. But putting a few dollars into each and then letting the money ride through market peaks and market crashes could be a great way to help you ignore the market in the short term, and focus your investing on a longer-term horizon.

Rich Smith owns shares of NavSight Holdings, Inc. and Vector Acquisition Corporation. The Motley Fool owns shares of and recommends Virgin Galactic Holdings Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Virgin Galactic Holdings, Inc. Stock Quote
Virgin Galactic Holdings, Inc.
$6.74 (-4.26%) $0.30
Stable Road Acquisition Corp. Stock Quote
Stable Road Acquisition Corp.
Holicity Inc. Stock Quote
Holicity Inc.
Osprey Technology Acquisition Corp. Stock Quote
Osprey Technology Acquisition Corp.
Vector Acquisition Corporation Stock Quote
Vector Acquisition Corporation
AST SpaceMobile, Inc. Stock Quote
AST SpaceMobile, Inc.
$13.34 (-4.24%) $0.59
NavSight Holdings, Inc. Stock Quote
NavSight Holdings, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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