If a Stock Market Crash Is Coming, History Says These Are the 3 Financial Stocks to Buy
2026-10-04 22:15
•Reuben Gregg Brewer •The Motley Fool
••••• •••• Axe Cap view
Three Defensive Financial Stocks to Consider if a Market Crash Hits
As global markets flirt with bubble valuations, three financial stocks stand out for their resilience and defensive qualities.
Markets are looking stretched, with valuations reminiscent of the 2000 dot-com bubble. While SA hasn’t felt the full brunt yet, it's wise to consider how to shield portfolios if global turmoil lands hard locally. US firms like Berkshire Hathaway, Realty Income, and Progressive show why certain financial stocks can act as havens. Berkshire’s massive cash pile gives it license to snap up bargains in a downturn. Realty Income’s consistent dividends through multiple crises prove the value of steady income even when share prices wobble. Progressive’s focus on insurance and bond-heavy assets helps it stay stable when equities sell off sharply — a useful reminder for JSE investors who lean heavily into stocks like Sanlam and Old Mutual with financial services footprints. For South Africans, watching USD/ZAR is crucial; a weaker rand would feed inflation and pressure local banks’ credit quality. Count on defensive plays to protect capital, but remain nimble—if global growth surprises to the upside, these safety nets may lag. this is just our opinion and not financial advice
Trim exposure to cyclical JSE financial stocks like Capitec and Standard Bank. Consider reducing equity risk and watching Realty Income (via ETFs) or diversify globally into defensive financials. Keep a close eye on USD/ZAR and hedge accordingly. Wait for clearer signals before buying aggressively.
- Realty Income (O)
- Berkshire Hathaway (BRK.B)
- USD/ZAR
- Global economic recovery surprises, lifting risky assets
- South African fiscal or political shocks weakening rand further
6/10
With market valuations at levels not seen since the dot-com bubble and multiple economic headwinds present, the article recommends three financial stocks as defensive positions: Berkshire Hathaway for its massive cash reserves, Realty Income for its reliable dividend history through market downturns, and Progressive for its essential insurance business and bond-heavy portfolio.
Our take is based on reporting first published by The Motley Fool.