The Best Time To Buy Stocks Is Recession

By: Amit Kheterpal

They say that when the going is good all the people jump onto the stock market bandwagon thinking that they will make pots of money and will retire rich but with like everything else making money in the market takes patience, time and some amount of risk taking.

People when they see others making money they start buying stocks at times when the market is high and hope that the stocks that they touch will give them amazing returns. Those people who jump into the stock market on a high will almost never make money and forget that the stories that they heard on the street were of the people who has picked up stocks when they were low.

Buy low and sell high is the guru mantra of the stock market but is almost never followed by the majority of the people. Most of the people buy when the stocks are at high price and from that point the returns are not much.

To buy when the stocks are low recession is a good time. The reason is simple enough that even though the stock has solid fundamentals and strong foundations the stock gets beaten down. However that company or stock has all the abilities to be back on its feet when the tide turns. The only reason in the recession this stock is down is because of lack of demand.

In times of recession most of the people are either not buying because they have either lost their jobs or they are simply conserving cash. The minute the economy improves people will get jobs and will start spending money in more vigorous manner.
Good companies have in recessionary times already shed extra flab as well as introduced cost cutting measures and form that point onwards if they have strong demands of their products it will be win win situation as the operating profit margins will be very high.

That translates into very high stock prices once the economy rebounds and the investor sentiment begins to improve.

Stock buying is all about opportunities to buy stock at low and recession is that very opportunity that you are waiting for. However you would argue that how will the money come to buy the stocks as you are in the same boat as others and may not have a job or you will be conserving cash. Very true but as I said earlier that some amount of risk taking is involved and you need to take some risk and buy some stocks to not miss the opportunity in recessionary times.


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Start investing in Dow Futures trading

It is an easy job to invest in stock market rather than Forex ..........And the most potential investment in stock market is value investing........
Forex is based on Technical and so far I think technical can't make money anywhere in the world as after all the market is moved by fundamental.......
This is my own opinion and many can differ me..............

I think this mantra has run its course.
Many are caught in this, never to recover. My MPF (401k equivalent) from 2002 is worth less than what I put in. Fortunately, I opted for the guaranteed fund based on the tech-bubble crash of 2000.
Any contributions made to the 401k after 2002 are invariably in red.

Even the great Mr. Buffet has lost some 30%. What I've observed about this wizard is
a)that he has cash at all times and
b) he is disposing off his stock periodically.

Best time to buy stocks is durring a recession is very true but only if your in a secular bull market for equities and bonds. Right now we are in a commodity bull market. So in any recession during this time you would want to buy commodities or real estate or currency in commodity producing countries and near their producing cities.

How About a Depression that Lasts for 20 Years?

The US stock market is still in “bounce mode.” All bounces come to an unhappy end. This will be no exception.

If you step back a bit further, you could see it in a different light. Ten years ago, The Daily Reckoning warned of a long, Japan-like slump. Then, the stock market fell and the economy went into a recession. But the downturn didn’t last long. And in the bubbly years that followed, our alert was quickly forgotten – especially by us! But now, 10 years have gone by. The S&P 500 has lost 20% of its value during that period. Wages and income are static. And there is not one single more job in America than there was then. It was a “Lost Decade” for the American economy.

So get ready…

How about a depression that lasts for 20 years? It could be on its way.

In December, exactly 20 years ago, Japan’s stocks closed at an epic high – 38,957 for the Nikkei 25 index. Last week, that same index closed at 9,977.

Readers will quickly note that the Japanese are idiots. Why else would they allow a 20-year bear market? Why else would they permit their economy to slide sideways for nearly an entire generation?

Where is the Japanese Bernanke?

This is almost the same question we posed readers 10 years go. Except then, we asked: Where is the Japanese Greenspan?

Greenspan…Bernanke…it didn’t seem to make any difference. American central bankers seemed to have magical powers, at least compared to their Japanese counterparts. They seemed able to succeed where the Japanese failed…

American economists mocked the Japanese 10 years ago. But what goes around, comes around…

Japanese and American economists go to the same schools. They have the same silly ideas. They are equally incompetent, as near as we can see. And yet, the Japanese have suffered one ‘lost decade’…and then another…while Americans went from bubble to bubble….

But, maybe our first idea was right after all. After we warned that the country could follow on Japan’s heels…entering a long, soft, slow depression…the Greenspan Fed and the Bush federal government opened up with all cannons. They blasted away on both fiscal and monetary fronts…ending up with the biggest barrage of stimulus the world had ever seen.

And what happened? They inflated another bubble…bigger and more dangerous than any before it.

Now, that bubble too has blown up. And now we look around. Once again, the Bernanke/Obama team is firing every gun; just as the Greenspan/Bush team did in the early 2000s…only more of them. But this time, the volleys are not having the same effect. Even though asset markets are bubbling up as hoped, the depression won’t go away. Unemployment is over 10% and still increasing. This is not another “jobless recovery” like the one in 2002-2003. This is no recovery at all.

Then, we look back at the last 10 years. What do we see? Instead of making economic progress, we see a nation making economic mistakes. And, under the leadership of the Obama/Bernanke/Geithner team…they’re still making mistakes. The same mistakes. Only bigger ones. And so we have to wonder…

Maybe the next decade will be ‘lost’ too. Stocks have gone nowhere for the last 10 years, but they are still expensive. On average, they sell for 50% more than the long-term average P/E. Usually, when they are this high, the next generation produces piddly gains. Could it be that, 10 years from now, we will look back without having added a single dollar of net return? Yes…it is quite possible. Likely even. That will mean a total of 20 years with no profit for stock market investors.

Which would serve them right. You’ll recall, perhaps, that at the end of the ’90s it was widely advertised that the surest, simplest road to riches was the stock market. The Dow was supposed to go to 36,000, according to one well-publicized forecast. All you had to do was ‘buy and hold.’ You’d get rich for sure.

Of course, it doesn’t work that way. As soon as investors all come to think the same thing the only sure thing is that what they all think is balderdash.

Well…then…what do they think now?

As near as we can see they believe two contradictory things. On the one hand, everyone says the dollar is doomed. On the other hand, they all seem to want dollar-denominated US Treasury bonds.

But actions speak louder than words. They may talk about the end of the dollar; but that is what they still own. And that is what they’re still buying – via US Treasuries. So…we want to be short US Treasuries for the next 10 to 20 years.

But wait. Isn’t it too soon? Ah, there’s the rub. Treasuries seem to be approaching a major peak. Maybe they are there already. Maybe they aren’t.

“What bothers me is that we still haven’t had that other major leg down in the stock market,” we told colleagues Issy Bacher and Dan Denning today. “It’s not natural for a bear to take a chunk out of asset prices…and then just go away. Typically, the assets bounce back…and then the bear takes another chunk out of them.

“Since we haven’t had that next leg down…we have to assume it’s still ahead. But investors seem totally unprepared for it. When it comes, they’re going to panic. They’re going to sell shares all over the world. And they’re going to seek safety…where? They’re probably going to turn to US Treasury bonds. Treasuries will go up, not down…

“Now the funny thing is that moving to Treasury bonds will help the US government finance its deficits…and possibly stretch out the depression for years. As long as the dollar is in jeopardy, the feds are in danger. They might not be able to finance their deficits. Which means, foreigners…and investors generally…could walk away from the dollar at any time. That would cause a major crisis. If the feds couldn’t finance the deficit with borrowed money…they’d be forced to print it…causing hyperinflation.

“As long as they can finance it, on the other hand…we could face a long depression.

“That’s the risk that no one is paying attention to…and no one is prepared for. That’s why it seems like the most likely outcome. A long, slow, on-again, off-again depression…just like we forecast 10 years ago.”

http://wallstreetpit.com/12815-how-a...s-for-20-years

I would agree with the sentiment of the OP. My stocks, which I bought back in March, are showing nearly 35% appreciation. Another poster may have a point, though, about this being a 'bounce'... I'm considering whether it's time to take my profits...

The article says that during recession its good to buy stocks. Thats not entirely true. A good share trader must always look for whom he is investing money. In fact even during recession, there were many companies in china and india who stood firm undisturbed by the recession. Just because a company's share value has gone down during recession, it doesn't mean that company would go up once again. It might go down once for all. Thats not the mantra. It is always worth investing in those companies whose shares are steady or less deflecting even during the tough times. You might not see the result immediately but in course of time it would guarantee you a good return. The one who treats stock market as gamblers paradise will loose the most.