Stocks

Whenever non-investors think of “investing”, their first thought is usually stocks. Which then is followed by thoughts of uncertainty, risk, and in most recent times during this economic crisis, people would fear buying stocks that are near rock bottom. Bad economy, falling stock prices, what is a young investor to do? Well, let’s see, falling stock prices… Hmmm… Cheap stocks? I know! Buy stock when the market is at the floor! Sure the economy is poor right now, but wounds heal, and given time the economy will regain strength. A general rule of investing is to buy low and sell high. So, to invest in stock now would be a good observation of that rule.

But what about the fact that so many companies are on the verge of bankruptcy and also the many that have already gone out of business? Of course you don’t want to buy shares of a company that’s going bankrupt. That would be dumb. But what you could look for is a company whose business is absolutely needed in this culture. Maybe not many people are buying new cars right now, so the auto industry might not be the best choice. But people still have their old cars and they’ve still got to pump them with gasoline. So perhaps the oil industry would be a good idea. Do some research by looking at companies like Chevron-Texaco (CVX) or Exxon (XOM) on NASDAQ.com. Also, I don’t think people are going to stop using their phones anytime soon, so try looking at different telephone companies, like AT&T (ATT) or Sprint (S).

Just remember, if the company offers a product or service that’s vital to this culture, our way of life, then there might be a better chance for that company to remain in business, even during a recession. I hope this makes sense. For myself this is mostly conjecture, as I am not that familiar with trading in the stock market. Though one more tip I can offer is, do lots of research before investing. Know what you’re doing when you do it and know why a stock might be good to buy before you buy it.

Precious Metals

Metals such as silver and gold are another example of a safe investment during bad economic times. Very often when the US dollar loses value, the prices for gold and silver go up. There are also other things that influence the value of precious metals, for example, the government’s economical decisions. Keep in mind that depending on the circumstances the relationship between the value of metals and the value of the dollar may look different.

It’s important to buy gold or silver when the markets are at a low. They don’t have to be at an all time low, just low enough so you can make a profit when the markets go back up.

For more detailed information on how to purchase an trade gold see Investing in Gold. You may also be interested in reading my articles on Paper Trading Gold where I post weekly updates on the status of gold on the market.