In the middle of The Cheat Sheet, the stock market has already dropped and the economic news is now bad. People think things are really bad, and are resistant to get back into the market. Investors throw in the towel and sell stocks. This is the time to get in, the stock market starts to rise and the best places to be are Technology and Financials.
- Technology
Computer and Internet companies with new and exciting products produce can deliver huge profits. Think mobile devices, and online stores. These companies could have been sizzling during the downturn, but the stock’s were held back due to market conditions. These are the companies to got get into quick when the bull market starts, because once the market gets going these stocks could soar.Tech stocks decline more than the market during a downturn, so purchase at the instance of a new bull market for best results. Once the stock market is already up and the economy turns up too, IT Outsourcers and Online Advertisers start to get money from companies that know its safe to expand. This sector is good to own until the the stock market is in a solid correction as the best tech stocks can withstand little market declines — but if the little decline turns big, these stocks can tank quickly. - Financial
When the economy is down, the Federal Reserve lowers interest rates. Low interest rates drop the lending costs to banks, and banks can make more money. Brokerage firms get more orders when the stock market rises, and investment banks make money on new IPOs. Poor credit lenders are also good because the economy is about to get better.Financial stocks are good to invest in during the worst of times — this is when Financial stocks could be at their lows. Think ahead — this sector will do well eventually so buy now. Techs and Financials often start higher at the same time, but its too risky to buy techs early. Financials make their run during the first year or two of the market going higher, then their performance can get uninspiring so aggressive investors will get bored and leave.
