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How to Pick Recession Proof Stocks

Contributor
By Matt SF
eHow Contributing Writer
(5 Ratings)
Pick Recession Proof Stocks
Pick Recession Proof Stocks

Picking stocks in a difficult market is hard enough. Much less, picking them during a recession.How does one pick a suitable investment that can weather the storm during a recession? Learn how...

From Quick Guide: Profit in a Recession
Difficulty: Challenging
Instructions

Things You'll Need:

  • A brokerage or retirement account with adequate funding.
  • A computer with internet access.
  • Knowledge of human nature or the economy in general.
  1. Step 1

    Identify a sector of the economy that is vital to normal ways of life.

    Ex) Energy stocks - which provide electricity to sustain power to your hair dryer or laptop computer for internet usage.

  2. Step 2

    Identify an sector of the economy that is fulfills basic human requirements for life.

    Ex) Food Stocks - people need to eat to live right?

  3. Step 3

    Identify an sector of the economy that fulfills passions or social tendencies.

    Ex) Retail stocks - people (especially kids) always want to wear the newest and coolest trends in clothing to belong to the "in crowd".

  4. Step 4

    Identify an sector of the economy that fuels a habit.

    Ex) Cigarette stocks - sure it's bad that people smoke, but everyone knows smoking is dangerous, so why turn a profit since you must breath their second hand smoke.

  5. Step 5

    Identify an sector of the economy that requires each person to spend money.

    Ex) Oil stocks - we all have to drive to work, to the movies, or drop the kids off at soccer practice.

Tips & Warnings
  • Confirm that your stock pick is recession proof by checking it's earnings statements. Stocks that constantly make money in a down economy are excellent choices for recession proof stocks.
  • Always research any stock tip you receive from the internet, the TV, or even the water cooler at work. Never buy a stock on blind faith alone.
  • If you are not an investment professional, or have little experience, run the idea by a trusted friend or family remember to make sure your idea isn't a bad one.
  • Make sure the investment you choose fits your risk profile (how much are you willing to risk to reap the rewards).
  • If you are new to investing, it is advisable to hire an investment professional or pick a mutual fund which has a high rating by Morningstar.
  • Never invest in a stock sent via mass emails. These are notoriously "pump and dump" based schemes that hype a stock to increase it's share price.

Comments  

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on 2/8/2009 I think the Demand Studios editing department disagrees with you there, otherwise they wouldn't have approved it.

margalik said

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on 1/12/2009 bad grammar and misspellings.

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