by Paula Shepard

Created on: October 27, 2008

The Advantage of Recession

Recession is a period of reduced economic activity. Recession is not the end of the world as we know it, it is a downturn in a normal economic life cycle. That's right, recession is cyclic; it will certainly not last. As sure as we experience recession, we experience boom times of economic growth. What we need to learn from recession is how to ride the waves so we can prepare ourselves during the upswing to take advantage of opportunities that lie at the bottom. There is no need to react to the Chicken Little speeches we hear on the nightly news with fear. It is a time to take action.

During times of economic growth there are those who spend as fast as the money comes in and there are those who are savers. Recessions are harder to ride out when you have been a spender, but for those who have money in the bank, it can be a time to increase wealth make those large purchases at a discount.

Prepare yourself: When investing, the experts say buy low and sell high. When the stock market is up, it is prudent to put a portion of your savings in short term CD's or savings accounts. One trend I've noticed is that when the stock market is up, gold prices are down. Putting a portion of your savings in gold when it is low in value, almost assures a profit when recession hits and the market takes a downward turn, driving the price of gold skyward. This behavior leaves one in a good position to take advantage of bargains during a recession.

Mind the market: When the stock market tanks, the time is ripe to buy stock in solid companies at a bargain. In the past month, many large, well-established companies have seen their stock prices drop more than half of their original value. Buy now, these companies are not going to go out of business. Their value will come back over the long term leaving you with significant gain.

Buy a house: There has never been a better time to invest in real estate. Not only can properties be had at bargain prices but also the interest rates are at an all time low. For those who want to purchase and restore a foreclosed property needing some TLC, opportunities abound. There are businesses liquidating building materials in an effort to dump inventory as well as craftsmen looking for work who may do the job "on the side" sparing you the high price of union wages.

Become a landlord: People losing their homes will need to go somewhere. Recession and foreclosure will cause the demand for rental properties to soar. Have you have ever

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