How To Make Money In A Down Stock Market  

Article by Rick Brunting

In this article I’d like to talk about several simple tips, tricks, and techniques that just about anybody can use to help make money in the stock market even when the stock market is tanking across the board like it is today.

We don’t like to talk about how to make money when the stock market is doing poorly, but the fact of the matter is that we are in the midst of a global recession that began towards the end of 2008 and has continued unabated into 2010. Through necessity we have to start talking about ways to profit in tough times because, let’s face it, times are pretty darned tough!

Luckily there are many different things that even the average investor can do to make money in the stock market during lean times, or at least protect your portfolio when times get tough and that’s what I’m going to talk about in this article today.

The first thing you should do whether times are tough or not is to allocate your portfolio assets correctly. I’m talking of course, about diversification. Nobody should be 100% in stocks alone. How you split up your portfolio will depend on many different things but mainly on your age. Younger people have a longer time frame to invest in which means they can make up for mistakes and can therefore take a little more risk than an older person who doesn’t have as much time to make up for mistakes and should therefore be in less risky investments.

One strategy for making money in a down market is to invest in stocks that pay high dividends. Dividends have historically been signals that suggest a company is doing well. The fact that a company is still able to pay dividends even during bad times is a huge deal and especially if a company is raising dividends during bad times, it can be a huge sign of strength.

Finally, during down markets, or bear markets as we call them, it’s a good idea to invest in companies that reside in bear resistant industries. Certain industries historically don’t drop as much as others during bear markets.

These industries include consumer goods (because people still need to eat!), electric utilities, household products, and things of this nature. You can invest in specific companies individually within these sectors or industries, or you could purchase a mutual fund that focuses solely on these types of companies and a little bit of research can find many of these for you to invest in.

So there you have several very simple tips that anybody can use to make money in a down stock market. Quite often investors make more money when times are bad because that’s when the real opportunities show themselves and with a little due diligence and luck, hopefully you will fall into this category yourself.

About the Author

Rick Brunting runs a wall mounted pot rack web site where he also reviews the best rogar pot rack for your kitchen. He has been an article writer online for well over 5 years and also enjoys fishing and basketball.

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