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Last post 03-13-2008, 11:21 PM by aquaswim47. 6 replies.
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  •  03-11-2008, 6:41 PM 24998

    What should one invest in during a RECESSION?

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    Wall Street is very nervous that our economy is pulling in to a recession. Mr. Buffett has basic rules as to what to put your money in during a recession.
    Stocks that people will always buy the products of are his favorites. These include gambling stocks, beer and alcoholic beverages stocks, home care stocks, and basic food stocks.
    A very intriguing gaming stock is GCA. Beer stock is BUD, food products stock is KFT, and Home care stock is JNJ.
    Over the recession in the early 00's the general market was down over 60% when the gaming and beer industries more then doubled!
    Invest in stocks that people will always buy products of at the same type of rate. No matter if there is a recession or if there is no recession. to view other great articles on recessions and buffett please click here

  •  03-12-2008, 12:49 AM 25021 in reply to 24998

    Re: What should one invest in during a RECESSION?

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         During the Great Depresion people mostly ate potatoes, so based on past experience, we should invest in potatoes.

  •  03-12-2008, 8:25 AM 25024 in reply to 25021

    Re: What should one invest in during a RECESSION?

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    I'd say if you were in the recession, I'd invest in more aggressive names (i.e., construction, retail, industrials, financials, and automakers), but if you are going into the recession, you may want to invest in more defensive names (i.e, aerospace & defense, consumer staples, and biotech especially names like JNJ).
    Aqua

  •  03-13-2008, 10:54 AM 25079 in reply to 25024

    Re: What should one invest in during a RECESSION?

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    I'll tell you won't you shouldn't do.

    Last night I logged onto an investing site and an anaylst was telling everyone to sell! NO NO NO! The concept is buy low sell high! For most individual investors if they now sell they willbe taking a loss. During a slow time (or yes, recession) we should move long term and pick up (in stages) stocks of well run/ strong/ companies that we like. In the long term these will be great picks. If you must do trade short term and you are positive we are in a recession you Short stocks to make money! On my accounts at investopedia and updown.com I have been shorting stocks like crazy and making money like crazy. (Can't do it in reall life due to lack of funds)

    So for a recession two options I would do:

    1) Buy quality companies in stages (i like ones with good dividends also) and hold them for long term.

    2) Short the worst stocks to pick up some quick gains.

  •  03-13-2008, 9:59 PM 25112 in reply to 25079

    Re: What should one invest in during a RECESSION?

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    The problem with shorting the worst stocks is volatility. Puts would be a high price if there is a lot of volatility to the downside as what happened with New Century while calls would be expensive if there is also rumor about a potential upside (i.e. merger activity), a turnaround story (like VMW), or both (like LEND).

    Another way to potentially short would be to buy covered calls. The problem with shorting the market with a buy stop order is the time it takes to execute and if the stock rises sharply over night (as what occurred on the night that the Fed lowered the discount rate).
    Aqua

  •  03-13-2008, 11:03 PM 25117 in reply to 24998

    Re: What should one invest in during a RECESSION?

    Reply Quote
    Andy above made a very good point, buy low sell high. During bullish economy you go long, during a recession you go short. This doesn't mean you do it blindly, though you might still make good money if you do. Even in a recession there are very good points of long entry, like the one a few days ago. But you should be careful with the long positions. Like Buffet said once, the best of your best stocks will go down, and when you think they will no longer go down, they go more. In short, cash is the best investment during a recession, and cash is best generated by shorting.

  •  03-13-2008, 11:21 PM 25120 in reply to 25117

    Re: What should one invest in during a RECESSION?

    Reply Quote
    Buffet also would want you to be sure you know what you're doing and to avoid tactics that you don't understand.
    Aqua
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