Long Term Investing In Basic Consumer Goods Companies

As 2009 begins the United States is experiencing its worst economic crisis since the Great Depression. In these tough economic times where is the best place to put a long term investment? It has always been good advice during a recession to put your long term investments in banking or basic consumer goods. Well, banks are getting bailed out themselves so that leaves basic consumer goods. People always buy hand soap, toilet paper, dish soap, and laundry soap. The basic consumer goods companies keep making money and paying dividends through good times and bad.

Long Term Investing in Basic Consumer Goods

Companies such as Proctor and Gamble tend to do well in all economic times. People always need and buy basic consumer items. Those interested in patient long term investing in companies such as P&G and 3M will usually see quarterly dividends and a slow steady appreciation of the value of their portfolios.

Proctor and Gamble, as an example, makes 12 Billion USD a year and pays dividends of about 2.6% on invested capital. These folks are considered the best managed company in the United States year in and year out. Besides doing business in the United States P&G, 3M, and Clorox do business throughout the world. And, yes, no matter where you go people still buy basic consumer goods in good times and bad. Owners of basic consumer goods stocks usually get their dividend checks every quarter.

When to Make a Long Term Investment in Basic Consumer Goods

One might have expected that consumer goods stocks would be at the high end of their trading ranges considering that the United States is in a recession and has been for a year or more. However, P&G is trading in the middle of its range. Thus a long term investment in this basic consumer goods stock will not be initiated at the high end. Unlike other sectors such as autos and electronics people will not shy away from buying hand soap or toilet paper because of a somewhat higher price. It is unlikely that basic consumer goods stocks will need to get bailed out like the Wall Street firms in the news.

Bailouts and Basic Consumer Goods Stocks

Because of the stability of basic consumer goods companies they don’t need bailouts and will not be subject to increased government regulation or oversight. Long term investment in these companies will probably just keep making you money. Long term investments in companies that are NOT in the news is a good thing. The main place you find news about consumer goods companies is in the business section when they report their dividends.

A Last Thought on Long Term Investing and Market Timing

For the time being put your capital where it has the highest potential of being safe and will give your long term investments a steady rate of return. When you think the recession is halfway over, and other stocks start moving up, do not move all of your assets at once. The old pros always suggest that you leave a portion of your long term investments in something solid. This has always been sound advice, once again proven true in the last few months. Long term, patient investing, especially in solid consumer goods companies, pays off in the long run.

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