Here’s what happened to cheap shares after the last global pandemic. Buyers beware!

first_img Image source: Getty Images. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Cliff D’Arcy | Tuesday, 8th December, 2020 Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Due to the Covid-19 pandemic, 2020 has been a good year for buying cheap shares — but only if bought at the right time. Unfortunately, buying before March was largely a bad idea. The FTSE 100 index hit its 2020 closing high of 7,674.6 points on 17 January and then plunged as Covid-19 went global.By 23 March, the index had crashed by almost 35% to close at 4,993.9. This was one of the deepest and steepest market meltdowns in the index’s 36-year life. After November’s boom, the Footsie bounced back to nearly 6,500 points by early June, roughly where it stands today. But are there any lessons for investors from comparing Covid-19 to the 1918 flu epidemic?5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Could this be another Roaring Twenties?Covid-19 is far from the first global pandemic — it’s simply the worst in over a century. Humanity was regularly plagued by rampant disease, notably smallpox outbreaks before Edward Jenner pioneered vaccination in 1796. Smallpox routinely killed three in 10 sufferers and its eradication contributed hugely to the world population climbing eightfold in 200 years. More recently, the deadly Spanish flu epidemic of 1918–19 killed up to 50 million. But then came the Roaring Twenties, when stock prices soared for eight years as investors grabbed cheap shares.Although cheap shares have surged worldwide since Halloween, stock prices never rise in a straight line. Hence, investors might learn something from looking back 100 years. When the flu epidemic eased off in 1919, pent-up demand for goods and services surged. Thus, the 1920s was a golden age for investors, especially in the US, which had become the world’s leading economic superpower. A robust, broad-based recovery created huge global prosperity, which is what we hope for from mass vaccinations in 2020. However, rapid rises in stock prices often sew the seeds of the next crash.Cheap shares soared in the 1920sWhen this public-health emergency subsides, consumers (especially the wealthy) will resume shopping and spending, boosting global growth. This happened in style in the 1920s, sending the Dow Jones Industrial Index soaring to new heights. After some steep falls, the Dow Jones closed on 24 August 1921 at 63.9 (versus over 30,000 today). It then soared like a firework, hitting a high of 381.17 on 3 September 1929. That’s a near-fivefold (497%) rise in eight years. Great news for buyers of cheap shares, right?Then came two catastrophic economic events: the Wall Street Crash of October 1929, followed by the Great Depression of the 1930s. As the global economy collapsed, the Dow Jones crashed to close at 40.56 on 8 July 1932. This wipe-out of nearly 90% in under three years erased an entire decade of gains. Indeed, the index didn’t exceed its 1929 peak until 23 November 1954, more than a quarter-century later.What lessons would I draw from this? The first is simple: buying high-priced stocks during a long bull market often works out badly. Therefore, I’m convinced that many US mega-cap tech stocks are very overpriced today, especially Elon Musk’s Tesla. Also, I see the S&P 500 index as having come too far, too soon since its March lows. 2021 will not be a perfect year and there will be many bumps along the way. Then again, despite the prospect of a no-deal Brexit, I still see value lurking in the FTSE 100. That’s why I’d buy cheap UK shares today for better returns in the 2020s!center_img Enter Your Email Address Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended 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. Simply click below to discover how you can take advantage of this. Here’s what happened to cheap shares after the last global pandemic. Buyers beware! Our 6 ‘Best Buys Now’ Shares See all posts by Cliff D’Arcylast_img read more