SHARETIPSINFO >> Articles Directory >>Why to buy stocks in a recession time

 

Now it is official that we are going through the worst economic slowdown since the Great depression in 1930. The downtrend that began in the late 2007 in United States has hit the global markets and India is no exception to that. According to the experts the down phase is yet to see the worst and it would be foolish to predict the time when the market will recover from down phase and see a steady rise. There is no doubt this is hard time for investors but surely not a bad time. This is because this is the time to make some good investments that will give you great return in the long term.

Though many retail investors are shunning of the market during the recession, this is in fact a suitable time to invest in the stock market as you can get some of the best stocks at a price that is not possible in a booming market. This is perhaps the biggest advantage of investing in the recession hit market. Those large cap stocks of the leading companies that you have always wanted to invest in, are available at low price during recession. As all the stocks are hit with the down trend of the market during recession, you get the opportunity to buy some of the good stocks that are all set to rise high once the market bounces back.

While investing in the recession time and to gain from that you have to make sure that you buy the right stocks. When you are investing during the recession phase, you have to be all the mo5re careful for choosing the stocks. You have to pick up the stocks that are fundamentally strong. So you can invest in those companies that have low debt, high earnings and history of sustained growth over the past few years and of course a low P/E ratio. You can select a few industry or sectors and then choose the right companies to invest, as that will narrow your search for the best companies.

But when we are talking about investing during the recession, you must always remember that you should not think about in terms of the next day, or next week or next month. It will be too short a time frame to consider amidst the global recession. You should think about long term investment. Investments that will look really good after the recession if over and the global economy is on the rise once again.

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