How to 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...

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. 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. 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. 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. 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. 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.

[mattcastle12]

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

[margalik]

on 1/12/2009 bad grammar and misspellings.