Stocks in the USA fell recently on the news of a fall off in the manufacturing sector. Lower orders for items such as computers and industrial equipment suggests that companies are holding off on spending. As weaker manufacturing in the US drives stocks down what is an investor to do? As always fundamental analysis is the key to profits. Short term fluctuations in stocks prices drive the news cycle but it is long term anticipated earnings that eventually determine stock prices. As weaker manufacturing in the US drives stocks down we look to the future for long term investing.
Companies with Cash in the Bank
Investing in companies with cash is always a useful strategy. And, many US based large cap companies have lots of cash. They simply are unsure of how fast they want to invest that cash in new ventures. Companies with cash have a nice fat margin of safety. The fact that these companies have cash tells us that that they are making money. Provided that they continue to make money they have a good intrinsic stock value. Then the only issue is how much you have to pay for these stocks. Look for low to fairly priced stocks in companies with cash and do not fret over the short term news.
Find Bargains when the News is Bad
With our discussion about margin of safety and intrinsic stock value in mind even the long term investor can shop for bargains. Look at Germany, for example, in the midst of all of the dismal economic news on the continent Germany posted a positive balance of payments. Not every country and not every company is doing badly during the later days of the worst economic recession in three quarters of a century. Look for where sales are good. Look for new products. Look for stocks that are unfairly punished by bad economic news. Then, as weaker manufacturing in the US drives stocks down look for bargains in picking large caps, picking small caps, and picking penny stocks. The issue comes down to knowing what penny stocks to watch and which large cap stocks have hidden value. Do you homework and pick up some bargains as weaker manufacturing in the US drives stocks down.
Find Unique Stocks with Unique Products
As weaker manufacturing in the US drives stocks down one of the big Pharma companies saw it stock price rise. It turns out that Eli Lilly is encouraged by its research into a new drug to treat Alzheimer’s disease. Find a viable treatment for a devastating disease that affects over twenty-five million people and people will beat a path to your door with money in hand. High cost of entry businesses, businesses with a captive clientele, and businesses with patents on profitable products prosper even when the economic news is bad such as when weaker manufacturing in the US drives stocks down. Learning how to invest in the stock market during hard economic times can be profitable over the long term.