economic depression and making money investing in value stocksSep-18-2008 value stocks in a depressionDepressions have happened here in the U.S. before. The question many people are asking is, are we moving into one now? While nobody can fully answer that question it is obvious that we are having economic problems. IT has been said by Merrill Lynch that you should choose companies than any old idiot can run since eventually one probably WILL run it. What this means is we want to choose companies that are very hard to go out of business based on current market conditions-or ones that any old idiot can run. There are many companies I can think of that might fall into this category or being hard to take down even in a bad economy. Northwestern Corp as an example is an energy company that operates throughout the Pacific Northwest would be very hard to take down since they have a monopoly company and people are in dire need of power especially in the winter, this is value stock investing. This means that the stockholder will prosper even in the worst market should be able to make it even in the worst of times. what about short selling stocks in an economic depression?short selling stocks is always another option that one can use when the economy is bad. Just make sure that you choose the MORE expensive stocks with a high beta. If you choose to be investing in stocks make sure they are something that is needed like health care stocks. This about all you can do except for one last things about value investing in stocks. Make sure you hedge your portfolio with some commodity based securities like OIL,GLD,AIV. This is needed and these securities SHOULD be held for the long term and bough not based on their current price. The reason for this, is because all commodities like real estate,gold and oil will go up eventually no matter how bad the economy is right now. |