Profiting From The Rotten Economy

Hi All,

Today’s posting is a quick piece on the economy. As you probably know, America is currently in the midst of a recession. There have been 6 straight months of job losses, the subprime mess is still with us, oil has busted $145 dollars per barrel thus driving up the price of everything, and inflation is at an 11 year high and – oh yeah – home prices are down by 15%. In short the news is bad pretty much everywhere.

Well, instead of panicking or buying survival gear and moving to Idaho, you might consider doing the following:

1) Stay Positive & Focused: It’s a bit silly, but thinking positive may actually help you achieve the kinds of goals you wanted to have. I don’t entirely understand the processes, but there seems to be something about the relationship between attitudes and action that suggests that optimists tend to be more likely to achieve their goals. Also, unless you are Ben Bernake, you can’t do much about macro economics. So, it makes sense to stay focused on your own goals.

2) Consider International Stocks: Things are kind of choppy in the US right now, but the world is a big place. For example, there are many fine European, Canadian and Chinese companies that are making healthy profits in expanding economic conditions. A couple of industries you might consider are Chinese companies specializing in exports, Canadian Royalty Trusts, and Swiss eco-companies. But, having said that we don’t have any recommendations for specific stocks, but do think you might consider looking beyond the US.

3) Consider Precious Metals: We don’t normally recommend precious metals because they haven’t done well historically. However, some people think that gold and silver are good stores of value that retain their intrinsic worth even in an inflationary environment, so you might consider it. The encouraging aspect of gold and silver is that you can get some for as little as $20 to $40. Just cruise over to ebay and see what’s available.

As a final note about precious metals – we are actually considering selling some of ours. But, that said, it is entirely likely that the economy will be shaky for the next few months, so you might consider picking some up anyways.

Finally, just to reiterate the main idea here. Even though the economy is bad shape, there are still some things you can do to maintain a healthy bottom line.

Best,

James