by David Ireland

Created on: November 19, 2008

Ready, Steady, GO! In the current economic climate there is much too much negativity. As the value of stock portfolios goes through the cycle of re-adjustment, stockholders panic. This panic is, for the most part, a short term reaction to a real time market valuation of the assets held in stocks.

What we have witnessed over the past year is a response to financial largesse, principally caused by "incentivised" managers who chose to selfishly, line their pockets at the expense of making prudent decisions. We have at the same time, witnessed a downturn in global demand which is a normal and very natural event in the scheme of things.

The financial rout has rid the market of the majority of the businesses that failed to observe caution and prudence in their dealings. The unfortunate thing is that many good businesses have been damaged by the actions of the careless ones. Some of these businesses will suffer in the short term but investing in shares is all about using good information to formulate strategies to create income and growth in the future.

There are many companies out there that have experienced falls in share prices well in excess of forty percent. Many of these companies will suffer lower profits in the near term but will the dividends be over forty percent less? It is indeed a question worth asking. Stock market investors would do well to consider investing NOW. No! Not everything, just five percent of the portfolio value each month.

How do you choose which shares to invest in? Try this. As the economic stimulus packages take hold, spending on consumer non-durables will be first to rise, so look at food, grocery and cheap services including cable television, net services and the like. Once the economy claws its way up, consumer durables will be in demand but avoid autos, these companies will have to change their business model and produce cheap, environmentally friendly, transport before people will be attracted to their product.

Once the early stages of the economic recovery have taken hold, attention will again turn to housing and construction. In the mean time look for good building and construction companies that will benefit from government infrastructure projects. Watch raw material prices. With demand in the likes of China and India capable of rising at lightspeed, resource stocks look way too cheap. You can also bet that cheap oil will last months, not years.

If you were offered the opportunity to place a bet that gave you a chance of losing ten to fifteen percent of your capital but also a chance of adding twenty to thirty percent to your capital, would you bet something? While there are many pundits crying that the world order has changed and that things will never be the same, there is a whole body of historical evidence that suggests share prices WILL recover and that in three to five years, the world economy will be moving along quite nicely.

Choose to be analytical, approach share purchases in a business-like manner, avoid the doomsayers, be positive, buy well and start NOW. Your financial destiny is in your hands, it is your path to follow.

Learn more about this author, David Ireland.
Click here to send this author comments or questions.