| When stocks are bullish that is, when | | | | reward shareholders in a recession? |
| prices of the stock market in a steady | | | | Generally speaking, those that are tied |
| rise it is pretty easy for anyone to | | | | to fundamental basic necessities of |
| make money on Wall Street. Studies have | | | | life. We may not buy designer jeans and |
| any shown that in certain kinds of | | | | sports cars during a bear market, but we |
| easy-money markets, novices did just as | | | | still buy heating oil and we still use |
| well as pros when it came to picking hot | | | | electricity to light our offices and |
| stocks and reaping fast profits. But the | | | | homes. So utility company stocks |
| veterans of the stock market game say | | | | generally fare well during bear markets, |
| that the real test comes when there is a | | | | as do companies that sell other basic |
| bear market and stocks fall into a | | | | commodities like gasoline. Gold and |
| general slump. Those who can make money | | | | silver and other precious metals are |
| under those conditions will gain the | | | | also a good choice for a difficult stock |
| respect of even the most seasoned | | | | market season, because when people are |
| investors. But to do it requires | | | | nervous about the future of the economy, |
| patience, research, and discipline. | | | | they tend to invest in things of |
| Picking the right stock for the economic | | | | universal value, like gold. It provides |
| climate is not impossible, however. One | | | | a sense of security, because if all else |
| way to get a handle on which stocks will | | | | fails to attract consumers, gold will |
| perform best during a bear market is to | | | | still glitter and be considered an item |
| look at the overall picture of how the | | | | of special value and significance. And |
| stock market behaves. Usually bull | | | | if you buy gold before the bear market |
| markets are periods that also see a | | | | sets in, you can probably sell it for a |
| strong manufacturing sector. Houses are | | | | profit once the demand for it increases. |
| built, cars are manufactured, and goods | | | | In summary, stocks that provide a sense |
| like appliances and clothes fly off the | | | | of stability and security through |
| shelves. The companies that make and | | | | ownership of those basic necessities of |
| sell those consumer products do well, | | | | life are usually a good place to invest |
| and those who buy their stock to share | | | | during a bear market. And buying stocks |
| in that success drive stock prices | | | | whose prices have fallen to bargain |
| higher. But when the party is over and | | | | basement prices is also a smart |
| inflation kicks in, we begin to budget | | | | strategy. Many perfectly good stocks |
| our money. Sales volume declines, and | | | | with underlying value and strong |
| many factory workers find themselves out | | | | earnings get dumped when people pull |
| of work as consumer demand slackens. As | | | | their investments away from the stock |
| wages stagnate, so do purchases of high | | | | market en masse. Those who are patient |
| priced items like cars and homes, and | | | | can buy these at wholesale or below |
| this helps to accelerate the decline of | | | | wholesale prices, and then watch their |
| the stock market. | | | | purchases rise in value once others |
| But those who buy stocks that perform | | | | realize that these stocks are good buys. |
| well even in this kind of economic | | | | When the stock market begins to climb |
| recession the stocks known as | | | | again, those stocks that are undervalued |
| recession-proof stocks can usually do | | | | will rise quickly and you will be left |
| relatively well, even during sluggish | | | | holding winners that you bought at |
| bear markets. Which stocks continue to | | | | deeply discounted prices. |