Investment choices for Stagflation/recession?? : LUSENET : TimeBomb 2000 (Y2000) : One Thread

I know there are many, many knowledgable people that read through this forum regularly. If the oil problem persists into summer, I would expect a definite economic turndown, inflation, etc etc. If that occurs, what would be wise investment choices, either by type or sector? I would appreciate sincere advice.

-- jeanne (, February 19, 2000


Assuming that you don't believe that the market is going to tank...

I read some advice on other thread. I can't find it, so I can't give credit to the poster. Sorry. He or she suggested to look into what companies did well during the Great Depression (Coke, utilities). I would suggest compiling a list along those lines and also adding to it the companies that did well in the 73-76 time period, as well as the early 1980s.

-- (, February 19, 2000.

In times of troubles, remember to work from the basics.

Food, shelter, heat, communication, entertainment...
it is only in times of affluence (perceived and real) that the fluff rises above the median line of our social consciousness.
'bout done with the fluff now. Expect a 20 year more or less period of turbulance and crises.

-- pliney the younger (pliney@puget.sound.cold.fog), February 19, 2000.

Think about what people consume everyday, regardless of the economic situation. Think of the basic necesseties, then associate the companies/sectors which provide them:

I'm sure there's more, but I think this is a good start.

-- Tim (, February 19, 2000.

Uh , don't forget gold, silver.Best get gold and silver eagles. can be bought and sold @ Bid and ask shown as % over or under spot.

-- john schade (, February 19, 2000.

During the stagflation of the 1970's one of the best hedges was having title to real estate with an assumable mortgage at 5%. Of course, such mortgages had been acquired in the 1960's or earlier, not during worst of the stagflation.

People with small, durable cars that got excellent gas mileage saw their cars depreciate much more slowly than other cars, or even appreciate in value during some years.

As the world's opinion of the US dollar grew more and more unfavorable, owning gold and silver became more and more important for preserving capital or for profiting from the trend.

Basically, when inflation is on the rise, there is a penalty for holding currency or for loaning it. Owning real estate or commodities preserves capital. Up until the inflation is sweated out of the system by high interest rates, you can get a reasonable bang for your buck by buying real estate on credit.

The difficulty comes when world opinion forces the USA to reject stagflation and strengthen the dollar, as Paul Volker did in the early 1980's by raising interest rates so high that the real estate market collapsed. 1981-1984 was the worst economic period in the USA since 1929-1934. At that point, holding real estate was poison.

So, you pays your money and you takes your chances. Every investment is a dog sometimes ... but every dog has its day, too. All through the 1990's gold was a real dog. It stank big time. If we get stagflation, gold will pay off. If we get depression and deflation, gold will take another hit and lose still more ground.

My stupefyingly bland advice is: invest first in what YOU NEED. What you need to to make a living -- your skills and your tools. Then take care of your basic human needs -- a house with a good roof, food and clothes. Then get out of debt completely, as soon as you can. Then whatever is left over afterwards, invest in what ever takes your fancy: stocks, bonds, gold, oil, stamps, you name it.

-- Brian McLaughlin (, February 19, 2000.

"Plus, when times get tough, people will want stress relief if they can afford it. Wonder how Xanax, Zoloft, Prozac will move...hmmm...."

It WON'T move if people have to pay for it themselves. Have you priced any of this stuff? Besides a lot of those people will find that hoeing corn, pulling weeds, harvesting the crops, canning and freezing and drying the crops, feeding the chickens, gutting the chickens, etc, etc., are really great stress reducers. After you have spent a day doing all this, not forgetting to milk the cow or the goats and take care of the milk...and the won't feel any stress. You will be so damn glad to lay your head on a pillow that you won't be having any stressful thoughts. LOL Taz.... who has been there and done that!! I can do it again, but would just as soon not!...Oh...I think Proctor and Gamble would be a great buy for such times.

-- Taz (, February 19, 2000.

Thanks all!!!

Brian - I think you are right on about being debt-free in uncertain times. We have no debt presently: land,home,cattle, vehicles,equipment,etc. are all paid in full.

Our IRAs are in either insurance company annuties, or cash accounts with mutual funds.

Taz: I agree that Proctor&Gamble would probably be a good choice. They seem to make a lot of "stuff" that will sell in good times or bad.

What would be good food industry choices? It's my personal belief that the companies that are heavily into promoting genetically modified foodstuffs are going to gradually take a big hit on profits.

Energy??? Any opinion on GE, Plug Power, or the other companies that compete in the fuel cell industry? What about oil field service industries? Halliburton? Slumberger(sp?)? I think that British Petro is one of the biggest players making solar panels.... anyone know for sure?

Here's a wild-eyed prediction: Congress will reinstitute those tax credits aimed at alternative energy sources(that were taken away in the 80s).....sure hope they are retroactive for a year!!!

-- jeanne (, February 19, 2000.

Just my 2 cents: P&G is a good company. It is, however, trading at 36 times trailing earnings.

When investing, it is not enough to own something that is good, you must also own it at the right price. That is the biggest problem with the market today, prices that almost guarantee that you will lose money no matter what the economy does.

-- J (Y2J@HOME.COMM), February 19, 2000.

I like hard assets in an inflationary economy...such as real estate. You do want a fixed loan, you pay off the load with "cheaper" dollars for an asset worth more... The real bonus is getting property that you use (e.g, a home or business property) and getting the appreciation.

-- Mad Monk (, February 19, 2000.

Yes, even the stocks that would do ok in such a scenario are currently way overvalued, looking at p/e and all that. So don't buy now. The only equities of interest to me right now are micro-caps with promising proprietory(sp?) technology. It's a fun area to research online. One such company is MGAU who claim to have a new refining process which will revolutionise the entire precious metals industry, (making buy-and-hold of pm's a dicey proposition.) ps, I own some of this Co, so I'm biased. Another potential gazillion $ stock going cheap is TOUP, who appear to have solved the world's energy problems for all time! If not, their other inventions/products are promising enough as it is. And if Blacklight Power ever have an IPO, buy at ANY cost!

Remember, we are living in the 21st century, and despite the lack of flying cars and ubiquitous one-piece brown jumpsuits, there are still some futuristic breakthroughs coming along.

-- number six (, February 19, 2000.

I recall reading that the company that made Quaker oatmeal was one of the few that paid regular dividends during the Depression. Oatmeal was cheap, nutritious, and adaptable, so it became a popular food.

Number six, you got URLs for those companies you mentioned?

-- Cash (, February 20, 2000.


-- number six (, February 22, 2000.

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