Get Lucky in a Recession

I was just skimming through my rss reader when an article by Lazy at www.lazymanandmoney.com hit me.  The title, “Why a Recession Doesn’t Have To Hurt” is what really caught my interest.  He pretty much said what I have been thinking in my mind since there started to be talk about the country being in a recession. 

Two of the points he makes that I would like to expand on are to buy stocks while the price is low and to buy a house if you are in the market since the prices have dropped. 

Buying Stocks While The Price is Low

Any true investor knows that the safest way to invest in stocks is to buy and hold for the long term.  The reason for this is that in general, stocks fluctuate too much on a daily and yearly basis to make a steady profit.  Over 5 to ten years, good stocks have a record of increasing in value but less than 5 years can be risky.

I made the mistake of buying some shares of Apple AAPL when they were at $170.  Seeing as I was a novice, I had no idea what to do while I watched them crash down to $119.  I took that as an expensive lesson and then started to research more about stocks and the market so that I don’t get stuck in that position again.  In the meanwhile, I am holding onto those shares because I believe I will make a profit.  The shares hit $151 today and I am looking forward to them continuing to soar.  The point I am making is that within a year I lost over $50 per share but if I hold onto them for 5 years, the chances are that I will make a nice profit.  Obviously you can’t just choose any stock, but if you do your research and find a good company, you raise your chances of getting the profit you want.

In 5 years from now some people are going to be looked at as lucky because they made a killing on certain stocks when others bought those same stocks and didn’t make quite as much.  It is not chance that this will happen.  It will happen because the lucky person realized that we were in a recession and that the prices hit the bottom so it was a good time to buy.  The unlucky people will either buy too early and lose money at the beginning which offsets their gains, or buy after they see the stocks come back and lose out on the beginning of the rise.

Buy a House If You Are In The Market

If you’ve been reading the papers you will have noticed a few things about the housing market:

1. there are more foreclosures than ever before
2. there are too many new houses in the market
3. the price of houses has dropped significantly over the last few months

All of the above are connected but that doesn’t mean that they can’t all be taken advantage of.  If you have money for a down payment and can afford a house at the reduced prices, this is the best time to buy.  This is your chance to get lucky. 

There are so many people who started real estate businesses or their personal investing by buying a foreclosed property and then fixing it up a little and either renting or selling it.  Use this opportunity to get lucky. 

Do you have any additional ways to get lucky during the recession or have you in the past?  Leave me a comment.