1- Buy stocks on sale. When a recession hits, investors pull out of the stock market. This leaves you the opportunity to pick up good stocks on sale. I picked up RBC at $30 and Manulife at $12.
2- Ignore the Media. Newspaper companies sell more newspapers with negative headline news. Naturally, the media will pump fear into you. Ignore this fear, and invest in stocks.
3- Remember, the economy will bounce back. Have you ever been super sick and thought you’d never get better? That’s how people think during a recession. The economy will bounce back, study historical trends.
4- Dividends will make you comfortable. Even if the stock market keeps on tanking after you invest, the dividends from stocks will make you happy. RBC sent me a 6% Dividend per quarter during the recession.
5- If you can’t stomache a 40% loss, don’t invest. Near the low point of the stock market crash – March 2009 – my stock losses amounted to 40%. But I sucked it up, and now I’m making money because I kept those stocks.
6- Don’t time the market. Warren Buffet was way off when he invested in GE and Goldman Sachs. But he’s laughing to the the bank now, with capital appreciation and annuity.
7- If you want to time the market…The stock market will reach it’s lowest point once all the unemployment, bankrupty and low earnings in the news are the WORST that can be reported. So when the media shifts focus to news like the Swine flu (as it did in March 2009) times are better for the economy.
8- If you invest, invest big. You’ll be kicking yourself in the butt if you buy 1 share in RBC when one year after the recession the return is 150% and you could have made thousands.
9- Don’t listen to your teacher. Don’t listen to teachers, analysts or politicians. They’re too busy in their ivory tower to know what how the recession is impacting the real world. If you see more people driving new cars and buying Starbucks coffee, chances are the economy is turning around. Invest.
10- Urgency to Invest. Don’t wait until the media starts reporting about good times in the economy. Invest when people are fully depressed about the economy. You know you’re too late to invest when the analysts start slapping buy ratings on every stock on the market.