Will the stock market crash soon? The odds must surely have improved after Bank of England Deputy Governor Sarah Breeden’s speech last week.

“There is a lot of risk, and yet asset prices are at an all-time high. We expect there will be a correction at some point“, she said. And by the BoE’s usual restrained standards, these are powerful words indeed!

I can certainly understand why many private investors might feel a bit scared after this. Some may think I’m weird, but I’d welcome a summer of falling stocks and explain why. But first I’ll just park Aviva (LSE:AV.) share price chart here – and I’ll come back to this soon…

Cheap beer, anyone?

Suppose a brewing industry organization announced: “Beer prices are currently too high, but we expect them to come down.I doubt too many people are unhappy about this – except maybe the beer sellers. And if I were selling my shares now and was going to continue doing so, I would want the stock market to stay high.

But I’m still a net buyer of the stock. And I have no intention of selling anything anytime soon. This is where Aviva comes in. I bought Aviva shares some time ago and they have been very useful to me. The problem is, I like how CEO Amanda Blanc has transformed the company through fundamental change… and I’d love to have more of it.

However, we are currently looking at a future price-to-earnings (P/E) ratio of over 12. And for a company operating in a cyclical sector, exposed to risk from economic pressures, I don’t think that’s a particularly budget-friendly valuation. This may be fair value given the projected dividend yield of 6.25%. But it’s certainly not a no-brainer buy… and I could see short-term share price weakness.

A 20% drop?

But what if FTSE100 Should shares fall by 20%? This is the technical definition of a stock market crash. This would reduce Aviva’s P/E ratio to below 10. The potential dividend yield would raise to 7.5%. Wouldn’t that make Aviva look like a better buy? That would certainly suit me.

And dividends are an added benefit. If I can buy at a price that gives me a 20% better profit, the 20% improvement will persist with that purchase… for as long as I hold that stock.

Of course, if Aviva shares suddenly become 20% more pricey, the same will happen to everything else. But as a stock buyer, I wouldn’t complain about this problem.

Long term

All of this really only applies to investors who still want to buy and hold shares for the long term. Those who sell down, for example to fund their retirement, may have a harder time – at least until markets recover again, which could take several years if we’re unlucky.

And while I would prefer other options at the moment, I really think the dividend yield means Aviva is worth considering for long-term investors – even though the dividend is not guaranteed.