In todays up and down market we need to hedge against risk in our stock portfolios, especially with all this media talk of recession. Recessions and bear markets can make you great returns just as a bull market can without constantly looking for stocks to short; you just need to know how to properly “Recession Proof” your stock portfolio.
3 tips that can help you make returns in these recession bear markets are:

1. PLAY THE DIVIDENDS

Large Cap Value Stocks with high paying dividends can pay off huge in times of reccession. Pepsico.inc (Ticker Symbol, PEP) or Procter & Gamble (Ticker Symbol, PG) are excellent stocks to start with. Pepsi has increased their dividend 4 times in the past 5 years! Like they always say, it’s the small things that count. Keep your dividends money in cash and don’t reinvest it right away. When you have a cash not invested it always gives you that option of picking up some excellent stock on the dips in these kinds of markets. REIT’s and income trusts are not a bad choice either as long as you are watching them closely. Income trusts and REIT’s bring in excellent cashflow, especailly REIT’s where distributions rather than dividends are taxed more favorably.

2. LOOK TO INVEST OUTSIDE OF THE USA

When I say look over seas I don’t mean newer markets that are coming into their own but rather stable markets such as european exchanges or Canada. Newer markets bring on a whole different set of rules. While things were falling apart in the US Economy we saw excellent gains in the TSX in Canada but be sure to keep your eyes open to world markets. Companies like Potash Inc (ticker Symbol, POT) is an excellent play on the agricultural industry which will be booming for quite a while; we all have to eat even in a recession don’t we?

3. GOLD

In the past few years we have seen gold shoot to all time highs and it is still a great play. Gold is an excellent hedge against the US dollar. Even though some people are stock investors only keeping an eye on the currency market and the value of the dollar is an excellent idea. Gold is easier than ever to invest in since ETF’s and gold funds started coming around. I think it’s a lot harder to invest in solid gold bars because it’s not liquid! Look for those gold shares and again keep a small amount of cash to get into these on a whim. SPDR GOLD SHARES (Ticker Symbol, GLD) is an excellent one again to have on your investing radar.

And, always have a plan and never stop investing.

Kelly Parks
www.wealthforinvestors.com

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