Should you invest during a slow economy?

We all hear about the craziness of the stock market. One day it is up and the next it has fallen many, many points. People seem to be loosing money left and right on a daily basis when things go bad. With a stock market this unpredictable, it is a wonder that anyone invests, right? This would seem to be especially true for times when the economy has generally slowed down almost to a stand still. These times are known as bear markets, or slow downs. During these times investors loose confidence and stocks loose value. Sometimes bear markets can continue for a long period of time. So if you want to invest in the stock market, should you continue to do so in a slow economy or bear market?

The natural answer would seem to be know. This is a time when stocks do not appear to be making much money. People are selling and trying to get out of the market, so why would you possibly want to get in? There are actually a couple of reasons why you should consider investing during a slow economic time.

First, at the time of a bear market companies will try to sell stock for cheep. As interest drops in their stock so does the price. In an attempt to sell more shares and keep some sort of prophet, the average company will drastically reduce their share prices. This means that a carefull investor will be able to buy large quantities of stock that might have otherwise been very expensive. But why would you want to buy stock when the economy is bad? The answer is simply that the economy always comes back up. The real reason why investing in a slow economy can be a good idea is that over the long run the market tends to grow and produce more revenue for careful investors. Even if the stocks are low today, they could gradually climb over the next three or four years, finally producing a great profit.

What this suggests is that you should not invest in a slow market time if you plan on quikly selling your shares in a company. This would be very foolish because you cannot be sure if the market will sudenly swing back. In this situation you would probably loose money or only break even. If you know you might need the money, either for emergency purposes, or for any other reason, do not invest in a long term investment, such as bear market stocks. They will produce a profit, but only with time and patience. Pulling them out too soon could cost you money, time, and all of your hopes for a greater profit. So if you have the extra cash and can afford to put it away for several years, a bear market could be a great time to invest.

With this said, it is always important to realize that the stock market is a volatile and explosive thing. You can never predict what will happen, what company will fold, and what natural disaster might suddenly shift everything. In times of an economic slow down be sure to carefully investigate your investments. Don't just spend all your money, hoping that the market will someday jump back to where it should be. A careful investor always researches their investments and consults with experts. If you do not do this it will hardly matter if you invest in a slow down or time of great prosperity. The chances are that you will simply loose money.