Thursday, May 01, 2008

Investing during a recession

When a recession hits, a lot of people panic. They cash in their stock investments, afraid to play the market. I think that such fear is understandable, but counter-productive in the long run.

Here's what people should do. They should invest in defensive stocks. This means stock in companies that provide food, medicine, oil, gas, toothpaste, detergent, and the like. You know, the sorts of things that people don't do without, even when times are tough.

Of course, one should still pick one's company carefully. Some oil companies will do better than others, for example, and some food companies could conceivably go bankrupt. Still, the goal should be to invest in companies that can be expected to provide hearty, reliable returns on one's investment.