To be sure, these are not the worst of times economically. But these are tougher times; gas has risen to nearly $4 a gallon, food prices have skyrocketed, access to credit is limited, job losses continue to rise, and even though winter is now behind us, people spent a fortune to heat their homes through some very cold days, and the wounds haven't nearly healed yet. Next year it's not likely to get any cheaper.
The simple truth is that people do not have the disposable cash they had, and so they're holding back on non-essential spending. In a consumer driven economy such as ours that's not a good thing. Even as the stimulus checks begin to make their way into the hands of consumers, many experts agree that much of this money will go to help pay for gas and food, and therefore will not have as profound an impact on the economy as our faithful politicians intended. The wait for the recovery is on.
As well, when the official report comes out in a couple of months, I think the data will clearly show that the economy is in recession-a decline in GDP for two or more consecutive quarters. So, how are you going to make money out of this market?
I'm not going to tell you my best stock pick for the week, or provide any financial advice-I'm not a qualified financial advisor and I'm certainly no fancy Wall Street analyst (or even Donald Trump as someone suggested to me recently). I live in America's heartland and I work for a living in a production facility. But I can make an observation, and I'll give my best effort to convey why I think it's one worth paying attention to.
Look, the bad news is that the economy has taken a fall. But the good news is that the economy is resilient, and it is going to come back. It always does. So, if you want to make money in these current market conditions you want to position yourself well to take advantage of this certain rebound by buying the stocks of companies whose products people will buy when they've got money to blow again. And yes, people will have money to blow again.
Before you call me a nutcase, consider the sentiment of Wall Street investors, and frankly the nation as a whole, during the worst economic time our country has ever known. The Great Depression. While many people chose to jump off the tallest building they could find, others chose stocks wisely and put their money to work, and for many of them the payoff was extraordinary. They bet on the idea that things would get better. The economy would rebound. And it did.
Throughout history the stock market, with all of its turmoil, has outperformed every other single market hands down.
We're not at depression levels, but we are presented with an extraordinary opportunity to buy depressed stocks and take advantage of giveaway prices. If you're not buying stocks now, you're missing the boat.
So where do you put those investment dollars? What companies have been unfairly knocked around? There's a ton of them. Good, solid companies who have seen their stocks tumble for no other good reason but that the whole market has tumbled.
Again I'm not going to give you specifics here. But take a moment to think about where you'd spend your disposable dollars once the economy rebounds and money is flowing freely again. What will you splurge on? A new car? A new TV? A vacation? Dinners out? That new boat you've been wanting?
Those are the companies you buy today and cash in 12-18 months from now, and those are the companies you can be assured I'm placing my bets on.
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