‘As sure as the spring will follow the winter, prosperity and economic growth will follow recession’.

Bo Bennett

Of course the question is, which spring? The outlook for the global economy is uncertain with speculation of a double dip recession.

Rising unemployment, the debt crisis, a slowdown in growth in China and Government budget cuts are all impacting on the prospects for economic growth as we endure a period of austerity.

All sounds bad doesn’t it? Only it’s not. In fact, for the stock market investor it’s a great investment opportunity, it’s just disguised as lots of bad news. Look beyond the bad news and you may find shares priced very cheaply indeed, and that’s good news.

A double dip recession is a good time to go shopping for shares.

1.     What’s A Double Dip Recession?

A dictionary definition.

‘A recession characterized by a brief intermediate period of economic recovery.’

So the economy shrinks, stops shrinking, then keeps on shrinking for a while longer. Of course this can wreak havoc with investors who like stability, confidence, predictability and understandably, growth.

Sadly the world doesn’t know that is how it’s supposed to behave, so it doesn’t. Investors can make money from this.

2.     Learn To Love Bad News

In the media world bad news sells, and in the investing world bad news causes selling. 

Stock market investors, pay attention. Panic is a good thing for investors when it is happening to someone else. Bad news, like double dip recessions, can lead to bargains for investors as the market behaves irrationally.

At the first sign of a double dip don’t sell your shares and become a buy high sell low stereotype.

Take a contrarian approach and go shopping for bargains instead.

3.     Buy Cheap And Sell High. Simples.

‘Do you have any idea how cheap stocks are? Wall Street is now being called Wall Mart Street’.

                                        Jay Leno

Shares are not likely to be cheap during times of economic growth and prosperity.  A double dip recession will likely lead to cheaper shares as panic grips investors with economic amnesia. It happens every time. This time it will not be any different. In fact it is happening now.

Right now I can find examples of great companies trading at prices that I consider to be more than fair.

In a double dip recession there will likely be many more businesses falling into this category and the price may go from fair to cheap.

That is the time to hit the buy button, and you can bet that the likes of Warren Buffet are waiting and watching for that time. 

Jamie E Smith is the author of Making Money From Stocks And Shares

This content was provided by one of our users, Jamie