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