Gold versus Trading Stocks
Wow! The S&P 500 lost 4% of its value since October 1st. That’s about $1.3 trillion. Don’t panic and trade away all your positions just yet.
Think before you trade: how can I make money when the stock market goes down?
That’s where we come in! We spent the week researching companies, trying to find a trade that has both growth opportunity and protects your downside risk.
We came up with 4 trade ideas that could perform really well this month, given of course that we’re not a financial advisor and these are solely our own trade opinions!
Trade Gold (GLD)?
A lot of times, when investors are nervous, they tend to sell stocks and invest in rare metals, particularly gold. Instead of buying real gold, however, investors tend to purchase ETFs which track the price of different commodities.
Gold, probably the most common form of what’s referred to as a “safe haven” asset, is universally regarded as a store of value. Because gold is a physical commodity, it’s value is always reliable and doesn’t depend on market conditions, unlike currencies or stocks.
So if the economy takes a turn for the worse, the government raises interest rates, or the dollar loses value, your portfolio may end up taking a hit! Regardless, gold will retain its value. Because gold’s value is so reliable, its value generally increases when the stock market goes down or the economy slows.
Trade Costco Wholesale (COST)?
If the economy suffers, people will go out to eat less and start to hunt for bargains, which will lead many consumers away from their neighborhood grocery stores and towards Costco, which offers the ability to buy in bulk and save.
This year, sales have increased by nearly 10%, and they’ve retained 90% of their paying members. Next year, the company plans to expand its operations into China.
If Amazon (AMZN) is the disruptor of the modern retail space, Costco has been its silent vanguard, reaping respectable profits and expanding accordingly for years.
Trade Walt Disney (DIS)?
The Walt Disney Company owns some of Hollywood’s biggest media entertainment companies.
For many, television and movies offer a low-cost form of entertainment, and while you may be thinking that you don’t watch Disney films, just remember that Disney is massive and owns tons of other companies!
They own the rights to 12 of the top 20 highest-grossing film titles of all time, in addition to owning the rights to ESPN, Marvel, Lucasfilm (the creators of Star Wars). Disney also operates a chain of hugely popular theme parks all around the globe! Not to mention they own most of Hulu and plan to offer their own streaming product for cheaper than Netflix (NFLX) in the near future.
Or Maybe Dollar Tree (DLTR)?
Dollar Tree offers products at a discount and will become a more attractive destination for shoppers if the economy struggles and consumers want to minimize their spending.
Over the last 5 years, Dollar Tree has averaged growth of approximately 16%. With over 14,800 stores across North America and a market cap of only $20 billion, there’s a lot of room for this growth to accelerate – particularly if the economy takes a turn for the worse.
In case you missed it, check out our recent post about how to tackle Debt and take control of your financial freedom.
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