What Stock to Invest in Global Economy Downturn

People want to invest their money with one goals: having their money making more money. But how if the economy condition is recession? If expert says that if the economy is in bear market conditions (or recessions), we could take advantage on it. But when you want to invest your money what kind of stock you would likely to buy? Should we diversify our stock portfolio?

REMEMBER THE PRINCIPLE: BUY LOW SALE HIGH

Just like mention above expert said, you could have chance to make profit when the economy is in bear conditions. Usually, people which already had a stock having the worried about their investment value as their investment are less-value than when economy is in its good conditions. Expert said that people that have stock with declining price, should not sell their stock. They even suggest that it might be the time to buy that stock as the price a lot more cheaper than previous.

IF IT'S TIME TO BUY, WHAT KIND OF STOCK YOU SHOULD BUY?

It depends on your choice actually (usually you could start to choice certain industry as a starting point) + a kind of research on what are the stock that are currently undervalued. What type of stock you see as undervalue? Actually there are a lot of measurement to see if whether its undervalued, but one that i like to see is earning per price ratio.

I see earning per ratio just like credit interest rates or call deposit interest rate. But where earning per ratio is for stock investment, credit interest rate is for debt instrument, where call deposit interest rate is just like saving rate (the save rate :)). If the Company earning per price ratio is higher than current credit interest rates, it would be likely that the Company are doing better with their business.

Other would be like: price per book value (stock price divided by their stock equity value per its financial statements). Don't be overly satisfy if the rate was high, because it might indicate that the stock already overvalued. Basically the rate was just like future expectation rate of a company business. If it was too high it means it was too optimistic and of course it was overvalued.

WHAT PROPORTION OF STOCK COMPARED TO OTHER INVESTMENT SHOULD YOU MAINTAIN?

The best rule we would suggest would be 25-75. what it means that we could maintain maximum 25% of debt investment proportions compared to total investment or maximum 75% of stock investment proportion if the economy was in bear (recession) conditions. But if the stock market going to be wild (or bullish) condition, than you might be making higher proportion of debt to investment up to 75% maximum or 25% for stock proportions.

The reason behind this, is that we still want to have more stabilized income from debt security investment if the economy is in downturn.

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Learn more the basic investing your money and getting acknowledge about what the smart investor do to get more rich.