How to Invest Wisely During a Recession
Investing during a recession can be a scary proposition. Financial headlines trumpet new disasters daily--and there seems to be no end in sight. But this is when educated investors get busy. Bargains abound for those willing to see past the current turmoil. Here are steps to investing wisely during the tough times.
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Instructions
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Don't let the financial headlines fool you into acting out of fear. Remember that greed and fear are the two emotions that drive much of what the markets do. Those who win in the long run are those who don't act on either emotion.
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Look for defensive stocks such as healthcare and entertainment stocks that are beaten up, but still intact. Remember that stock prices are affected by perception as much as reality. If there are no fundamental reasons why the stock should be down, then it may be a good value play.
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Look at sound financial stocks if you feel adventurous enough. The stocks of regional banks that were largely unaffected by the mortgage meltdown may be good bets; Bank of America may provide some long-term gains as well.
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Don't forget to add some mutual funds to your portfolio; the Davis New York Venture Fund has taken a terrible beating over the last year and could be a good value play. Purchase it without paying a sales charge by investing in Select American Shares.
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