Bad times often create great opportunities for those willing and able to take advantage of them. Investing in the stock market involves both investment timing and stock selection. I am going to suggest 3 stocks with the potential for enormous gains once the world economies and markets are again in a growth mode.
In other words, in this article we concentrate on stock selection, and the investment timing aspect is left up to you. If you want to mellow out the risk of lousy timing, purchase shares in increments over time. First, my logic for these 3 picks. Then, we get specific.
The time period from 2007 through mid-2009 was virtually the worst of times since I began following the markets in 1972. Three horrendous developments collided simultaneously. The world's financial system was threatened with collapse, economic recession spread across the continents, and real estate values plunged.
If you believe that in the not-too-distant future that normalcy will resume, then there are 3 areas of opportunity in the stock market staring you in the face: the financial sector, basic materials and real estate stocks.
Financial stocks have taken a beating, including the largest and best known names in the money business. If you are willing to bet that the financial industry will recover, which stock do you go with ... Bank of America, J.P. Morgan Chase, Wells Fargo, Visa? You can invest in all of these plus more big names with just one stock investment. A stock with symbol (UYG) is an ETF that invests in the whole sector, with 2X leverage.
Basic materials stocks have been beaten up as a result of slowing economies (recession) around the world. The demand for aluminum, copper, and other basic materials fell. If things turn around which company will benefit most ... Alcoa, Freeport-McMoRan Copper & Gold, Nucor? You can invest in the whole sector by buying an ETF with stock symbol (UYM), with 2X leverage.
Real estate, including commercial real estate, has been hit harder than anyone could ever have imagined. Recovery in this sector could produce tremendous gains for investors large and small alike. You don't need to buy properties to participate. Real estate stocks like Simon Property Group, Vornado Realty Group, and Boston Properties are alternatives. Or, you can be invested in those and other major real estate stocks by simply buying shares in an ETF, stock symbol (URE).
All 3 of these stock picks are ETFs, and they are actively traded in the stock market. You can invest as little as a few hundred dollars or millions if you like. They all involve financial leverage of 2 to 1 as well, so these stocks are volatile.
They have all taken a big fall, and the upside could be explosive ... if your investment timing is right.
A retired financial planner, James Leitz has an MBA (finance) and 35 years of investing experience. For 20 years he advised individual investors, working directly with them helping them to reach their financial goals.