TRADING TIPS & TUTORIALS
How to make money during crisis and recession
Financial crisis or recession is something that many people consider as a nightmare. The first thing that comes to our mind when we read these words is losing money. “Stock market crash”. We can agree that it always creates a hard time for all of us. People are losing their job, houses, cars and businesses are getting bankrupt. But we cannot forget it’s something like a typhoon. We can prepare for it and we can protect ourselves from it.
Let’s take a look at what is it exactly!
Definition
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Correction - When the market decline -10%
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Bear Market - When the market decline -20%
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Crash - When the market decline -30% -60% (3-6 months)
Now let’s take a look what’s the difference between a Recession and depression
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Recession is when the market economy declines 6 months
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Depression is when the market declining at least 2 years and the country GDP also decline by 10%
So basically, when the Stock market and Real Estate market prices are starting to go down!
If you own business or you are just self-employed you can also see it, because there is a time when you have more orders, jobs, projects..etc and there is another time when the business is not running the best!
In the Financial market this is cyclical usually every 7-10 years there is the recession. Today what we are experiencing is caused by COVID-19. Last time we were able to see it in the 2007-2008 housing crisis before September 11, 2001.
Again, the problem is not about the recession. The problem is that people are not prepared for it and therefore they get hurt from it. Our TradeFroum goal is to prepare you for this situation and provide you a financial strategy that can work in this situation to make a profit and not lose money!
How to make money when everything is falling down?
That’s the question of what we are receiving today from thousands of people here in the Philippines.
Well, first the number one thing that you must have is money. This article is not about how to be rich without any money, there is no such thing and never existed before!
Perhaps you think how much to invest. We can potentially talk about one million pesos. Why? Because like every reasonable investor, we are aware that we cannot bet all our money on one card. This is called gambling. On the contrary, buying more companies into our portfolio gives us diversification and more potential stability in the future. Thanks to larger investment volume, we have higher chances of reaching a bigger profit.
So, if you have money let’s check how you can protect it and grow it.
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Cash
Keep liquid cash always! Cash is the king. Let me explain to you why. In 2008 a Ford Motors stock price was $1/ share (50 PHP) and in 2011 it reached $18,27. We are talking about growth by 1800%. Let’s take an example: if anyone would invest in the Ford company 1 million pesos in 2008 when the stock price was $1 and sold it 2011 when the stock price was $18. This person would reach a profit about 17,000,000 pesos! This is the reason why you should keep cash always because if the market is down, you can buy companies almost for nothing, and on the upside, you can earn big profit!
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Gold & Silver
The Gold and Silver are called God Money because it was here before us and probably it’s going to be hereafter us. Anytime when we faced unstable political situation in the market, possible war, existing war, the financial crisis the Gold & Silver was heaven for investors. This is the most trustworthy investment in the market. If it’s big sell, people start to sell their stocks and also their real estates, bonds everything and they start to buying Gold and Silver.
Example: October 29. 2008. 1oz Gold was $731 and 3 years later in 2011, the Gold price had reached $1873. We are talking about $1142 growth for every ounce. (We can also include Gold mining companies’ stocks like Newmont Gold Corp., Barrick Gold Corp., Agnico-Eagle MN)
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Utility Stocks
It can be war, financial crisis, anything and there are still people who live in their houses and they need electricity, aircon, light in the evening, television, washing machine in their daily life. Whatever happens, these people are going to live the same way and they are going to pay for it. These electric utility stocks can be a great idea to buy.
Example: If you like local companies, we can say that Meralco is the best choice in the Philippines. However, if you would like to go for international companies, we can also say that American Electric Power, EDF, and CHEZ can be also a good choice.
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Oil
Now we can see push down of WTI crude oil price to $19,50, because of the lockdown situation and limited airplanes, boats, cars. But we cannot forget that this situation will not last forever. Everything will come back to normal when this virus crisis is over. Demand for oil is will increase again.
From March 31 to April 6 oil prices increased by 40%, so the best buy can be the oil or oil mining companies like BP Shell, Chevron Corp. or Exxon Mobile.
This is the 5 best option that you can buy when it comes to a financial crisis. Again, the problem is not a crisis. It is happening every 7-10 years. The problem if you are unprepared for it. With this strategy, you can protect your money and if you’re lucky, even grow or double it. If you have more questions about it contact us. Let us show you how to get the knowledge about investment so next time you can be prepared. You can be prepared for it even if you don't know what stocks are.
If you would like to get more knowledge or help with the first steps
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(Note: Any opinions, news, research, analyses, prices or other information contained in this article is provided as general market commentary and does not constitute investment advice. Trade Forum will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.