Recessions are for Buying

Everyone seems to be worried about the economy these days. As a result, the market is tanking. People freak out and want to cut their loses, so they sell everything and get out. Those people are fools. Now is the time to invest more money in the market.

Almost everything is down. Rule number 1: Buy Low. Everything is low now, tech stocks and financials especially. Apple and VMWare are two great examples of stocks you should buy right now. They are down a huge amount, but not because they are doing poorly. They are down just because the rest of the market is down. Both of these companies are increasing profits, and more importantly, have great future prospects for increasing market share and revenue. They will go back up; it's just a matter of when the market settles. Instead of trying to cut losses, you should look toward future gains.

Another sector of stocks trading at great prices right now are the financials. Wells Fargo and Bank of America are down because of the market, and because of the sub-prime mortgage nonsense, and a lot of other factors. However, this is all relative in the short term. These are huge banks and they will go back up. Now is the time to invest in them. And let's not forget about Citi!

When the market as a whole is down, your first reaction might be to sell and save from losses, but the market usually makes its correction and will settle, and go back up. But in the mean time, the best opportunity to buy is when everything is down. A recession is great news for an investor!

Buy and Hold

Investing is not a short-term activity. The object is to grow your money. The longer you have it invested, the larger your potential returns.

The basic rule is buy low, sell high. However, it really should be buy low, hold... sell high.

In the short term, stocks go up and stocks go down. Profits change, the economy changes, political events happen; you cannot predict what will happen in the short term. However, in the long time, the stock of a good company will go up. So invest for the long term, and you will not be in danger of short term volatility.

In addition to riding out short-term fluctuations in the market, you will save money in long-term capital gains taxes if you hold on to a stock for at least one year. However, if you are investing in stocks, then you should be in it for at least five to ten years.

Buy stocks of good companies, and hold them.

Buy Low, Sell High

When stocks are low, buy. When stocks are high, sell.

Often people don't think rationally when it comes to their money. If the stock market starts to take a dive, people panic and sell. Even if it's at a loss, they will sell out of fear of losing more money.

You don't lose any money until you sell. If you have a long term buy and hold strategy then you have nothing to worry about. What you should do when the stock market falls, is buy more. The best time to buy is when everyone is selling out of fear. You can get good companies for great values because the stock price just followed the market. Once the market recovers, you will make out.

If the market is down because of an economic recession, you should buy. Again, the idea is buy and hold. Downturns and recessions are the best time to buy. The worst mistake people make when the market is down is to get out of the stock market. You want to get in while it's cheap so you can make the most return.