Lux Investing

What are some good strategies for investing during a recession?

Public Comments

1. It depends on what caused the recession, and what is likely to bring us out. Investing is a specific term, a long term for that matter. If stocks are depressed, including those with large profits, piles of cash, and superb continued prospects, then these will often seemingly lead the market out of recession. In the last recession, companies like Wal-Mart, Microsoft, and Exxon surfaced early. Oodles of cash, rising profits, continued prospects. Military needs brought companies like Boeing and Lockheed bobbing above the fray. Concerns about oil and the possibilities of more drilling close to home, or deeper drilling abroad, gave lift to Schlumberger and Baker-Hughes. Aluminum and steel consolidations, copper and related industrial producers came next with news of new orders or enhanced capacity in light of near-future growth. All of this was related to what was suddenly working again. The depressed stocks rebounded and those who bought while they were cheap and unattractive were then riding the crest of the wave when it came. It didn't come suddenly, except for those who weren't watching. Waning recessions are the time for contrarians to be buying. That is when otherwise solid companies are cheap.
2. BUY!!! That's my advice. I don't mean go out and buy just anything, do your homework as you normally would and find the right stock/mutual fund, etc. for you. All too many people contribute to this flight to safety when there is the slight sign of a recession, this is a bad move. Let me put it this way; If you've shopped at Target for the last 3 years for your toilet paper, then one day they all of the sudden put your favorite brand on sale at 30% off, would you go get toilet paper at K-mart, where it's more expensive? This seems like a very trivial analogy but this is exactly what people are doing. Simply put a recession, a crash in the market, no matter what you call it, this is simply a "sale" so to speak, why would you run from a sale? If you are absolutely conviced that stocks you have are going to go down and never return to the price they were at once then by all means sell, but this typically isn't the case. Of coures this is all quite simplified but the bottom line is BUY! Like the good old boys used to say..."buy low, sell high", well it's low now so jump in while you can. Oh yeah, diversify, diversify, diversify.
3. I'm a novice at investing but my main approach so far has been to look long-term and go for blue chip stocks at or near their 1 year lows with particular focus on stocks that have dependable high rates of dividend payments with good cash on hand that ensure no dividend cuts are likely in the future. Some examples include Pfizer (PFE) and Bristol-Myers-Squibb (BMY) which have 5-6% dividend rates and are at or near their lows. I've also invested a smaller amount in stocks that I feel are way undervalued (my impression is that the market tends to overreact to both bad and good news). I think a great example is Netgear (NTGR) which has recently gotten hammered even though its fundamentals are excellent. As they say, be greedy when others are fearful and be fearful when others are greedy.
4. I'm not by any means an expert in economics, but as a rule of thumb, real estate is usually a good investment. As my father always says, "God isn't creating any more land". So as population and industrialization increase, there will always be a premium on land and real estate. The value of property goes up faster than the rate of inflation. And for me, that's all I need to know.
5. well whats been working for me is puts and short selling. stocks tend to go down faster then the go up during a recession.
6. Each recession has its own causes, so what worked in the last recession may not work here. Real estate may be over-owned and overpriced, and the financing for it has tightened considerably, so I have to disagree with that recommendation. We have not seen a credit crisis like this in most of our lifetimes (maybe going back to the depression). It resembles the 1970's with inflation surging due to geopolitical matters and bad monetary policy, except this time many more people and institutions are overleveraged. Plus, the US budget is in much worse shape and increasing taxes now could hurt the economy further. Stocks were basically flat from 1969 until 1982. Unless the Fed squashes inflation, rates are going higher and that will affect the growth of the economy. On the positive side, the rest of the world is growing and doesn't have the budget problems that we do. There are several US stocks with large exposures to the growing emerging markets. They should continue to do well
7. Food commodities. Everyone has to eat.
8. Value mutual funds without an annual fee over 1%. Perfect time is now. You know the old adage: buy low, sell high.
9. I am not an expert on investments either but as doctor D said, I also believe that property investment is a good choice. My parents bought property many years ago and it has more than tripled in value. Also, because they were not living in the property, it was a source of rental income over the years. As I hear from my friends, gold is a good investment right now. Interestingly enough, I found this question in yahoo answers asked 1 year ago and it looks like this guy's predictions are right. : http://answers.yahoo.com/question/index?qid=20060618201809AABdQWx
10. try fundraising online http://hotshorturl.com/ok40
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