Investing in a recession
With the debt crisis in Europe looking grimmer and grimmer, and the possibility of Greece defaulting now seemingly an unavoidable fact, stashing your remaining money under your mattress may seem like the sole solution left amid eroding commodity markets. Yet there are still investments strategies left to protect your interests and yield returns.
Global concerns over Greece defaulting on its debt have crippled market yardsticks, such as copper and crude oil investments. Investors are in constant fear that a default by Greece will spread economic illness throughout the rest of Europe, causing a mass financial breakdown and sending the region, and subsequently the rest of the globe into another torturous bout of recession.
As Europe’s finance ministers continue to meet and yield nothing more than false hope, and the European Central Bank ponders new and unexplored stimulus plans, the region’s window of opportunity of pulling Greece out of its downward spiral is rapidly closing. Once that window is gone, commodity markets and their primary earners, such as crude oil investments will be driven down too drastically for any investor to hold on.
At this juncture in time a more potent question is when Greece does default, how strong will the ripple effect be, and how will commodity futures suffer.
Though a Greek default will have little effect on the U.S. and the west, if that default causes a chain reaction across Europe, commodity stock will plunge lower that what they were in 2008, when the recession was in full swing.
Investments like airlines, manufacturers, retailers and any other stocks that deal heavily in Europe now appear to be unwise ventures.
Selling euro-centric mutual funds and instead buying up international funds will save an investor from an eroded portfolio.
If an investor is determined to retain his/her stock in Europe, they should make sure that the money tied up in those contracts will not be needed for at least five or six years.
Safe havens and one-minded stocks are also a bad decision right now. Diversified stocks are the key to surviving through a major economic crisis in Europe.
Investing in big-name companies will also help an investor stay liquid.
More obscure companies, like firms in Canada also look to be good investments, as their domestic economies are healthier and they look to be more able to withstand a global slowdown. This will ease the tension of investor, looking to stain in the game of major commodity futures, such as copper and crude oil investments. Once those commodities rebound, your returns should grow exponentially.