How to invest before/after recession

[goRPaul]

I'm in college, and I'm just starting to get into money and investing. We're all very confident that the economy is headed for a recession, if not a depression. My question is, how can I use this knowledge to my benefit before the recession starts and after the recovery begins?

 

[AceNZ]

This recession is unlike others that have come before.

Basic suggestions:
1. Minimize debt
2. Move your money out of dollars and US real estate
3. Buy gold (bullion coins or vaulted with segregated ownership)
4. Buy foreign currencies and stocks, particularly those of commodity-driven economies
5. Buy agricultural commodities (either futures or through ETFs)

The recovery won't be starting for a long time. It's impossible to give meaningful advice about that, because so much is likely to change between now and then.

 

[Eponym_mi]

I'm in college, and I'm just starting to get into money and investing. We're all very confident that the economy is headed for a recession, if not a depression. My question is, how can I use this knowledge to my benefit before the recession starts and after the recovery begins?

Look for good financially solid companies and buy their stock. When there is a lot of doom and gloom (like now), you should be buying a little at a time. You're young...the world is not coming to an end.

 

[liberty_Forever]

I'd suggest putting your money into precious metals, food, and a firearm. If you want to buy stocks, I'd suggest the mining and energy sectors.

 

[Apparition]

I just cashed out $5000 of my mutual funds (while it still has value)... and will be purchasing $1500 in silver. about $1000 in gold (an oz).. and a couple of firearms (a pistol for my self and a revolver for my wife to be)... the rest I'm just going to keep as cash on hand to pay off any small debt as I might need it..

I'm still pretty ignorant when it comes to this kind of thing but I feel like I'm headed in the right direction...

is apmex.com a good place to purchase metals?
sorry if these questions are a little n00bish, but i have no shame in my game. =)

these forums have really taught me a lot in the last few weeks that i've lurked... they at least give me good starting points on the information that I seek.

 

[Corydoras]

is apmex.com a good place to purchase metals?

I haven't owned precious metals in years, but on this board and goldismoney.info, apmex.com is always mentioned favorably.

 

[markpa]

I just cashed out $5000 of my mutual funds (while it still has value)... and will be purchasing $1500 in silver. about $1000 in gold (an oz).. and a couple of firearms (a pistol for my self and a revolver for my wife to be)... the rest I'm just going to keep as cash on hand to pay off any small debt as I might need it..

I'm still pretty ignorant when it comes to this kind of thing but I feel like I'm headed in the right direction...

is apmex.com a good place to purchase metals?
sorry if these questions are a little n00bish, but i have no shame in my game. =)

these forums have really taught me a lot in the last few weeks that i've lurked... they at least give me good starting points on the information that I seek.

Sounds like a plan. For PM's I like kitco as well....

 

[silverlegacy]

The paranoia is unbelievable here. The economy is not heading for a depression, maybe a prolonged recession that will last a year or so. The number one factor in kick starting the economy is the housing market and getting credit flowing again, and the signs are starting to point to everything getting back on its feet. The California housing market has leveled off and is starting to pick up again. The Western states of Oregon, Nevada, Arizona, Utah and Idaho are all very close to leveled off or have. The middle of the country will follow. Housing may drop for another 6-12 months in parts of the country, but a drop after that is very unlikely. 2009 will shape up to be a very strong year in the housing market and 2008 won't be as bad as it is like to be thought. In fact, while 2007 was bad, house sales were still pretty high. It just looks bad compared to 2006 which may have been the biggest year ever.

If the economy does go into a depression demand for all commodities will drop causing gold, silver, oil, etc prices to drop and they might drop more than stocks. If the US goes into a depression, the world will follow. The impact that the US has over the worlds markets, is actually quite amazing. Even right now, Europe, Australia and New Zealand are feeling the pinch in our credit markets. The EU may have to lower their interest rates, and New Zealand is saying that economic growth will slow to 3% this year and in just over a year to 2%.

Also, remember that silver is mainly an industrial metal, and if we go into a recession the demand will fall for silver. The price will then drop. Commodity-based investing only will lead to failure, stay diversified as much as possible.

 

[attackkatt]

Consider Ammo............My AR15 rounds are getting harder to find and the price of good US made will soon be too high. Great barter tool in the future.

 

[davver]

The paranoia is unbelievable here. The economy is not heading for a depression, maybe a prolonged recession that will last a year or so. The number one factor in kick starting the economy is the housing market and getting credit flowing again, and the signs are starting to point to everything getting back on its feet. The California housing market has leveled off and is starting to pick up again. The Western states of Oregon, Nevada, Arizona, Utah and Idaho are all very close to leveled off or have. The middle of the country will follow. Housing may drop for another 6-12 months in parts of the country, but a drop after that is very unlikely. 2009 will shape up to be a very strong year in the housing market and 2008 won't be as bad as it is like to be thought. In fact, while 2007 was bad, house sales were still pretty high. It just looks bad compared to 2006 which may have been the biggest year ever.

If the economy does go into a depression demand for all commodities will drop causing gold, silver, oil, etc prices to drop and they might drop more than stocks. If the US goes into a depression, the world will follow. The impact that the US has over the worlds markets, is actually quite amazing. Even right now, Europe, Australia and New Zealand are feeling the pinch in our credit markets. The EU may have to lower their interest rates, and New Zealand is saying that economic growth will slow to 3% this year and in just over a year to 2%.

Also, remember that silver is mainly an industrial metal, and if we go into a sever recession the demand will fall for silver. The price will then drop. Commodity-based investing only will lead to failure, stay diversified as much as possible.

No, housing isn't going to recover. If you've been following the situation you'ld know that. I've listened to "its just subprime" and "its containted" since August and its been dead wrong. Did you see what happened to the California construction industry in the last employment report?

Your correct that in global deflation all assets, including gold and silver, go down. However, they don't go down as much as stocks. Elementary cashflow analysis should explain why. Short stocks and long gold has been the daily reckoning trade of the decade since 2000, and it is still relevant today. If we really experience deflation the real purchasing power of gold, oil, and food will hold up (oil and food by definition).

In the more likely inflationary enviorment our central bank is creating gold, silver, and commodities will do fantastic. There are also supply reasons why natural resources should increase in price.

George Soros published in FT a few days ago that we are at the end of the 60 year long credit expansion. That the dollar was finished and we were going to see a massive West to East wealth transfer. He's worth 9 billion dollars and he defeated the Bank of England in combat. If he can beat the BOE he can beat the FED.

 

[silverlegacy]

New home construction will take a bit to recover, but home prices and sales are starting to recover. Yes, it will take time and the market is going through an adjustment. I have many friends in various levels of real estate and banking industries and the prices are starting to recover in key areas. The Fed lowering interest rates is actually starting to get credit flowing through the system again. While it will have a dangerous aftereffect, it is working. The worst projections by the industries and economists suggest house can lose up to 30-35% of their value. Most predict 10-15%.

If you must be totally solid state in your investing look deeper in to platinum and rhodium. They are industrial metals to an extent, demanded in form of jewelry, and used in the building up of militaries extensively. Russia, China and the US are building up big keeping those in great demand. Just look at the price of Rhodium in 03 compared to now.

Oil will lose value in time, the bubble is set there. First off, there is lots of oil and oil alternatives that are around. The prices of alternatives are getting cheaper by the day, and the fact that it burns up and will run out in the future projects that it will drop. In fact, it has to eventually.

Commodities do in fact do really well, especially in our current environment, but to have your eggs all in one basket is asking for failure. Gold prices will drop from their current highs. You can bet that once this recession is under control, the fed will focus on inflation. They were starting before this meltdown happened, which was way too late and not effective in the short term.

 

[Deborah K]

I just cashed out $5000 of my mutual funds (while it still has value)... and will be purchasing $1500 in silver. about $1000 in gold (an oz).. and a couple of firearms (a pistol for my self and a revolver for my wife to be)... the rest I'm just going to keep as cash on hand to pay off any small debt as I might need it..

I'm still pretty ignorant when it comes to this kind of thing but I feel like I'm headed in the right direction...

is apmex.com a good place to purchase metals?
sorry if these questions are a little n00bish, but i have no shame in my game. =)

these forums have really taught me a lot in the last few weeks that i've lurked... they at least give me good starting points on the information that I seek.

We bought our gold from Andrew Gause: http://www.andygause.com/index.php
He is a monetary historian, and author, and a gold and silver dealer. I invited him to speak at a rally I was organizing in D.C. last summer and he agreed. This man is the salt of the earth. And he is a Ron Paul supporter.

 

[davver]

We haven't begun to see housing price declines yet. In order to get housing cost in line with wages we need 30% declines nationwide and 50% in CA and FL and other hot spots. Forclosure houses being auctions off at 50% aren't even selling.

We also haven't even begun to see the defaults. These things are going to be resetting over the next few years and you will see steady flow of defaults. The "rate freeze" is only going to prolong the pain.

Do you know how much of this was build into all these asset backed securities? Nothing. Moodies models predicted a 0% chance of housing prices declining EVER.

Oil and food have no where to go but up. All of oils price appreciation over the last few years has been due to the weakening dollar. We haven't begun to see the effect of lower supply as fields deplete and higher demand from China and India. They've got a $2,500 car now, what do you think they will put in it? Food inventories and land devoted to farming has been going down for a long long time. How is China going to feed a billion people with acid rain over the whol country and no water.

The Fed is not focused on inflation. They are increasing M3 over 15% Y-o-Y at this point. Why do you think the dollar has lost half its value since 2000. They just did a 75bp panic cut. Nixons words are as alive as ever this year, "Nobody ever lost an election by creating inflation."