When the financial crisis is deeper and prolonging, an investor should take it as a challenge and devise plans to convert it into an opportunity.
A crisis is not for wasting but investing as per the demands of the situation.
Here is a challenge for the winners, who have capacity to take risks.
An investor, however, should make a detailed study of all the issues related to the share market, because this is not the national, but the global crisis.
The factors influencing and impacting the market are many.
They need to be sorted out one by one as for their implications and appropriate decisions taken.
Think out of the box and take original and innovative decisions and act effectively.
As recessionary trends come to an end, it is time for rebound and rally in the market.
This transition period is important for an investor, where extra caution is required in all types of investment moves.
Not all recessionary cycles are the same.
The present one is peculiar and has severely affected one particular segment of the financial sector.
The financial institutions like banking! Savings and loans are particularly hard hit.
But the US government is coming to their rescue and they are likely to tide over the stormy weather in style.
The coming 6 to 9 months are crucial for the banking industry and it is likely to turn the corner.
This is an important development for an investor to note.
Recession does not mean that all the segments of industry are affected.
For example, in spite of the recessionary trends, the steel industry is going through an interesting time.
The year 2007 was good, 2008 seems to be even better.
Demand for steel is increasing, globally as several major projects are in the offing and in many the process of implementation is going on rapidly.
Remain absolutely non-emotional, and think of a long term plan, in consultation with the broker who specializes in such crisis dealings.
You need to take smart trading decisions, without bias.
If you analyze the history of the share market, you notice that notwithstanding the recessionary trends, the share prices tend to move up in the long run.
The bear run can never be the long-lasting trend of the market.
As the commodity market picks up, the share prices will experience the upward trend.
One good thing will lead to another, and the share prices will recoup the original levels soon and the process of Bull Run will take over.
Be cautious as for your investment strategy.
Trend changes during the time of recession need special study.
To be on the safe side, mark 70% of your liquidity for long term plans, and the remaining 30% for short term trades.
Also, deal with the stop loss levels with respect, without giving scope for your emotions to take over.
It is not necessary that you need to trade everyday.
If the market is volatile, and if you are unable to make the reasonable guess about the market trends, take a gestation period and relax.
There is always a tomorrow.
Recession or no recession, an investor needs to know what money management is abut.
It can make or break an investor.
The essentials of trading discipline will remain the same during the recessionary trends.
Know how much you are risking on each trade.
Do not risk more than 2% of your trading capital on each trade.
You will not win all the trades, and the losing trades yet need to make you stay in the game.
Recession is the time when an investor should not get over-exposed to a particular sector.
Shares of the companies of the same sector move in unison.
Good money management is the vital factor that will turn the investments during the recession in your favor.
This will bring results beyond your expectations.