As the economy slows further, and fear of a looming depression hovers over the heads of everyone, it’s difficult not to feel helpless. But with 2008 finally coming to a close, and 2009 on the horizon with the shining light of hope for a new start, you don’t have to hide yourself away from the markets.
In fact, most experts are suggesting the opposite, recognizing the current climate of the near-bottom market as an opportunity to create some long term investments that, while perhaps not offering the immediate payoff you would like, will still likely gain a profit as the world recovers from the current recession.
But with so many investors fearful of taking risks, and unwilling to jump once more into the markets, what strategies are most likely to be profitable in 2009? What can potential investors look for as a long term investment that will offer some security in a climate that seems to have none? Experts have been offering plenty of tips on how to take advantage of the current situation and profit from the high level of anxiety.
Tip #1: Don’t Put Your Eggs In One Basket
It has been a bit of a business cliche for years, and one that has been ignored as many investors throw their money into one high earning stock or bond. While this may have seemed like a valid strategy in the past, having a well diversified portfolio in a time of crisis such as this gives you a better chance of staying afloat, as others around you sink.
Tip #2: Precious Metals
Gold and Silver have had a bit of nervous energy surrounding them in the last 12 months, as prices have plunged dramatically, and the market became one that was increasingly unstable, after a fairly good year in 2007.
But as the new year approaches, more and more chartists have been noticing a shift in the market, and the prediction of gold and silver once again becoming viable investments seems like a reliable one. According to Kitco.com, metals such as gold, silver, and platinum have all closed on the New York market with a steady increase in value, and those of us who have bought and sat on these money-makers over the years are breathing a sigh of relief.
Now is a great time to buy, with prices still relatively low, and the bull market appearing to strengthen by the day. Which is unsurprising, really, as precious metals are commodities that never go out of style. Or at least not for long.
Tip #3: Real Estate
The housing market is admittedly awful right now, and it’s not the time for selling as house values have plunged to near-record lows. But with so many empty properties listed on the market, and being sold for such low prices, buying now might actually turn out to be a great long term investment. Not only can you potentially earn an immediate profit by renting the house out, but once the recession begins to pass the value will increase, and you will be able to sell the property at a profit.
Real estate is still one of the best elements of investing out there, especially if you have the money to pay it off up front due to the reduced availability of mortgages.
Tip #4: Undervalued Stocks
This is a big one. With stocks offering a higher yield then government bonds for the first time since the late 1950s (averaging at 3.3% versus 2.2%), now is actually a great time to look into those stocks that have been undervalued, and so offer a greater chance of earning.
Some of the best undervalued stocks (according to the Neural Fair Value 25 Portfolio) are:
Accenture Limited (ACN)
ADC Telecommunications (ACDT)
Big Lots (BIG)
BMC Software (BMC)
Check Point Software Technologies (CHKP)
FMC Technologies (FTI)
General Dynamics (DG)
Global Payments (GPN)
Herbalife (HLF)
Hewlett-Packard (HPQ)
Liz Claiborne (LIZ)
Lockheed Martin (LMT)
Mohawk Industries (MHK)
Noble (NE)
Nokia (NOK)
NetApp (NTAP)
Occidental Petroleum (OXY)
Renaissance Holdings (RNR)
Sony (SNE)
Symantec (SYMC)
Hanover Insurance (THG)
Urban Outfitters (URBN)
United Stationers (USTR)
Western Digital (WDC)
Wright Express (WXS)
Tip #5: Green Technology
It may seem like an overly optimistic business move, but for the first time in US history, green technology is becoming a good, solid market. With the US now the biggest producer of wind energy in the world, organizations like the National Alliance for Advanced Transportation Battery Cell Manufacture, and President-Elect Barack Obama already making it clear that he plans on making green energy a main focus of his Administration, now is a good time for investing.
Investing in stocks related to solar and wind energy, alternative fuels, plug-in hybrid cars, and organic foods may not bring an immediate return, but as industries continue to grow over the coming two years, as reliable sources predict, you could end up making quite an attractive profit.}
Tip #6: Holding Onto Your Stocks
If the current crisis has taught us anything, it’s that stocks do not always go up as many naive investors had been taught by the media. However, in times of weakness and panic it actually makes sense to buy while others are selling.
However, it is a calculated risk, just as the sometimes casino-like actions of stock trading in the first place are quite a risk, so if you are not willing to sit on your securities for a while, you may want to check out tip number 7.
Tip #7: Comfort Stocks
Even as the market seems to collapse around us, there are a few companies that are still going strong, and when you buy shares of those businesses, they are considered “comfort stocks”. With a lower probability of losing your capital, and a higher potential for earning, you will end up putting more into it in the beginning, but will probably earn more from it in the end. These companies are giants like Coca Cola, that never seem to stagger much. The risk is low in comparison to the likelihood that these companies will maintain their stability through the recession.
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