Four Ways You Can Take Advantage of a Down Market

 Four Ways You Can Take Advantage of a Down Market

 Four Ways You Can Take Advantage of a Down Market

A down market isn’t necessarily the worst thing that can happen to you as an investor. In fact, if you approach it correctly, you may be able to take advantage of the market’s decline in stock prices to make some profitable trades. Here are four ways you can do that.

Research companies that are doing well in a down market

Although the economy is still struggling, some companies are doing well. If you're trying to decide what to do when faced with an unstable economy, here are four ways you can take advantage of a down market 1) Sell stocks that haven't been doing well and buy stocks from companies that are strong in this economic climate. 

2) Purchase more stock from one company if it's been particularly successful. 3) Diversify your portfolio so that it contains both types of stocks (i.e., those who perform better during good times and those who perform better during bad times). 4) Increase your 401(k), IRA or other retirement account contributions while they are still tax deductible

Look for companies with high dividend yields

If you're looking for ways to capitalize on a down market, look for companies that have high dividend yields. These companies tend to be more stable and can help you diversify your portfolio. Plus, if the market goes back up, these investments will likely increase in value. 

Some examples of high dividend yielding stocks are: 

1) Exxon Mobil Corporation (XOM)

2) The Coca-Cola Company (KO) 

3) Phillip Morris International Incorporated (PM) 5) General Motors Corporation (GM).

You might also want to take advantage of an opportunity like buying out existing stocks at lower prices or investing in bonds or index funds.

Consider investing in companies with strong balance sheets

It may seem counter-intuitive to invest in companies with strong balance sheets when the market is down, but doing so can actually be quite advantageous. Companies with strong balance sheets typically have less debt and much more capital to reinvest back into their company. If they want to grow their business, they'll need to do something with this excess cash. It's better for them to invest it in their company than pay it out in dividends or buy back stock. The added bonus?  As these companies are adding value to their businesses, your investment will also increase in value. Get some international exposure: The U.S. economy might not be performing as well as we would like, but the rest of the world is still thriving--and that means there are opportunities for savvy investors who know where to look.

Focus on companies with low debt-to-equity ratios

Some might think that a down market is the worst time to start or invest in a business. However, there are some opportunities that can be found in times like these. One way to take advantage of this is by investing in companies with low debt-to-equity ratios. This will increase your odds of making more money and taking less risk, while also diversifying your investment portfolio during these tough economic times. The idea behind this strategy is simple: when a company has high debts compared to equity, it means that its shareholders (such as you) would have to foot the bill if things go south.