What To Do During The Recession...

We are in a recession. No matter what Congress and the President do, it will deepen.

Once upon a time I was an investor and I was what you call a Contrarian. That means I did the opposite of what the analysts recommended. They were halcyon days. I made money.

Unfortunately, I got divorced and my ex had a better lawyer. End of that part.

I am not a registered securities analyst, so take this all with a grain of whatever. I own no stocks, bonds, real estate, diamonds or foreign currencies.

Today is a holiday and the US exchanges are closed. That is good.Nobody will lose much today. Tomorrow, however, they are going to try to rally the markets. They may and they may fail. You never know.

How and what to do during the recession?

1. Don't sell. Buy more. You sell when the securities are up. You buy them when they are low. By buying more of a good security (that has fallen below the price where you bought it) when it falls, you average-down your purchase price.

2. Don't day trade. Invest for the long term. When your house price or value falls, do you sell and move?

3. Be patient.

What:

The US recessions alway pre-date recessions in other countries. Right now the Euro, Pound and Yen are very high compared to the Dollar. That is way out of whack. Just as soon as the election is settled and the foreign markets also slip into recession (they can't sell us goods when we are in a downturn, so their economies suffer) the foreign currencies will fall, and fall far.

You can sell (short) foreign currencies without actually owning them. You do this through a commodites broker. You must deposit the money it would take to own the currency first. Then, when the currency's value has dropped, you buy it back by "covering" your short position. The difference is your profit.

You can do the same thing with stocks, but right now the short interest is much to large. I wouldn't short sell any stocks now. Too late. The stock market is always the first market to recover, and you never know when that will occur. Nobody rings a bell at the bottom.

Stay away from gemstones, real estate and stocks unless you want to buy more to lower your overall purchase prices.

Stay away from Chinese currency, too. It is fixed at an unrealistic benchmark and doesn't "float."

I once sold the British pound short at $1.76 and covered at $1.38 and the difference was my profit (minus the broker's fees.) Right now the pound is around two bucks and will someday get back to about $1.50, where it should be. The Euro is almost $1.50. It will again reach parity with the dollar, some day. Big profit potential if you have lots of time and a strong heart.

Gold is way to rich, and so is silver. They are at all-time highs. Don't buy either. Really bad investments unless you bought them two years ago. If you did, sell them now into this bubble.

As for the analysts: They are usually wrong when they tout a stock. I watch Mad Money just to keep track of Jim's recommendations. He is about 50-50. That is excellent for any analyst. Most of them have interests in what they recommend. Remember that. They own stocks, too.

If I had the cash I would invest in Apple Computer (AAPL- Nasdaq) and Baidu - the Chinese internet company. That's all, except for Ford (F- NYSE). Ford is at a long-term low but has made moves to improve just about everything, including some forthcoming management changes. It dropped below 6 a share recently and I would buy a little. I am not recommending you do it, though, because I think it will take three years to get back over ten a share. Ford is not going to go away, and they have many new exciting cars coming in the next few years. They will probably sell most of their foreign make ownership and they should.

How about real estate?

Wait for a lower price. The shakeout is just beginning.

Diamonds? Buy one for the sweetheart when they will be cheaper next autumn.