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Strategy for Investing in equity during a recession

BY: Deena David | Category: Business and Finance | Post Date: 2010-01-28

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   Deena David
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How to make money and to invest should not be considered on the same foundation (making money can include greed, huge profits, complicated and risky products, leverage) that has brought the financial world down in a few months of collapse. In other words, for an investor, the game remains the same, the money should be invested, but the rules are changed.

Born as a crisis of subprime loans of over drafted Americans who invested in risky mortgages, the current financial crisis has taken the proportions of a global cataclysm in less than two years. Nobody and nothing has escaped the catastrophe. In fact international scholarships were down, real estate markets have fallen, investment banks have gone bust and fallen like nine-pins. Perhaps most importantly, millions of investors were left with empty pockets.

Some new rules of the game were formulated; new investment strategies are now born from the ashes of the old and have increasingly take into account the degree of liquidity and risk management of assets. How many of you regret making or not making certain investment decisions taken just before the crisis that we are in now? In order not to repeat them, there are some advices given by financial advisors over time and there are also some that you would have made.

The rules of investing have been present for years before this recession, but people change over time looking at others. If you were an investor in spite of all hell breaking loose around you, then these rules are not for you. If not, here goes:

Invest in multiple markets:

Most of the investors prefer to be limited in terms of investment on the domestic market. It is a mistake and people should diversify into multiple markets to limit risks. Nobody knows when or which market return will yield the greatest or the lowest, so the spread of investments is the most appropriate move.

Avoid large movements:

If you intend to buy or sell in large amounts at once, you take an unfair risk. On the other hand, waiting for the "right time" in which to start is also unsuitable for investments. Very few have ever caught the top or bottom of the market to maximize returns in terms of profit.

The market ‘predictors'

The market grows when everyone buys, and decreases when all are rushing to sell. Do not take any decision when everyone tries to make a "prediction" for the market, as no one will ever be able to do that. Most of them are trying to pursue their own interests.

Do not be fooled:

Sooner or later, someone will "push" you to buy shares, for example, even at high prices under the pretext that "there is no other alternative". Always there are alternatives, such as keeping the cash for a time when prices will be more attractive. So only listen to others and do not make decisions based on their advice.

These will help you to be able to make sure that your investment is safe and will also earn you a handsome interest and reward you suitably for the great investment ideas and not being a trader.

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