Investing Tip: Invest in Boring Companies When the Market is Down

Everyone keeps talking about how we’re going to start reducing our gasoline consumption because of the high gas prices. I disagree with this premise. I don’t think we’re going to reduce our consumption much, because we still need to bring our kids to soccer practice, drive to work, and run errands. You can dream about people going to the grocery store on their bike, but it’s not going to happen. What will suffer is luxury items and services.

Think of all the companies out there that offer luxury brand products and services. These are the companies that will suffer from the economic downturn, because the more we have to spend in gas and food prices, the less money we’ll have to buy brand-named clothing, Apple laptops, Tivo services, and satellite radio subscriptions. I’m not predicting that Apple and XM radio stock are going to plummet. I’m not a financial analyst. The point I’m trying to make is that you shoud focus your investing on companies that aren’t affected as much by consumers with less disposable income.

A great example of a boring company with great long-term growth potential

We all need to brush our teeth, use toilet paper, clean our houses, and wash our clothes no matter how high gas prices are and how low housing prices will be. Proctor & Gamble is a great example of a company that is worth looking at to invest in during slow economic growth. It’s not a sexy company, but it continues to grow and post steady profits.

Do you have any other suggestions of boring companies that perform well no matter how the economy is doing? Share them with us!

  • jim

    I have always been a big fan of buying stock in companies that are easy to understand and much out of favor with investors. Going against the crowd is always the best way to go when it comes to stock investing.