Investing during a recession: Part 1

By Tim Guidera bio | email

SAVANNAH, GA (WTOC) - For weeks this winter, every dip in the stock market triggered a drop in investor confidence, people wondering what they could do to protect their future.

But if you haven't done anything yet, you might already be doing the right thing.

"I think in this environment the important thing to keep in perspective is the long term,'' says Tom Hussey, senior vice president for Raymond James Associates in Savannah. "We all are a little more comfortable now than we were six weeks ago, but

you have to be careful and remember, you really are doing this for the long term. The market went down over an extended period of time, it's not going to go straight back up.''

While Hussey thinks a turnaround has begun, he says the market is still unpredictable.

So, he suggests fighting the temptation to aggressively seek the stock bargains that seem to be available when prices are down across the board.

"Even though it can make a broker rich, I'm personally very opposed to the idea of day trading,'' said Hussey. "I think that most folks consistently cannot beat the market short term. The types of investments that make sense today are the types of investments that always made sense - good, quality companies, good quality mutual funds, good quality long-term investing.''

Chip Usher, a broker for more than two decades, left the business before the downturn to start his own golf company.

And while he agrees that patience is the smart approach in this economy, he says some of the opportunities created by it might not be in stocks.

"I think there's some good quality tax-free bonds, the yields are reasonable - four and a half percent,'' said Usher. "But if you're in a high tax bracket that can be seven percent.''

He also says, regardless of the economy, conservative investing is timeless strategy.

"The General Electrics of the world are going to be here for another 20 years from now,'' says Usher. "They're really cheap and they're paying great dividends.

"I think that people who hit it big in markets like this are extremely lucky either in their timing or where they are. But I think anybody trying to do that now is chasing a dream.''

Especially, any money manager will say, when you're acting on information that sounds like a dream.

"Stock tips are usually worth what people pay for them, which is usually free,'' says Hussey. "They're usually about up and comers and maybe one out of 10 will work and people will hit a home run. But they'll lose so much on the nine out of 10 that don't work, that it tends to counteract it.''

Never more so than in a still soft market.

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