We in the West still suffer from the belief that the world economies revolve around us so when we suffer then so will the rest of the globe.

Not so long ago this was undeniably true but things have changed. The US is no longer the overwhelmingly dominant driver of world trade with Europe being dragged along on its’ coat tails.

That position has been steadily undermined since the turn of the millennium, arguably earlier, as a consequence of fiscal and political incompetence at the same time as the BRIC nations and oil producing nations have grown in economic strength.

It is with this reason that we are not convinced that a global recession is imminent

To state the obvious, the US and other Western economies are living on borrowed money, that is they are highly leveraged and have thus allowed themselves to become extremely vulnerable to both internal and external situations outside their control. Oil being the dominant external factor and the housing bust and personal debt being the internal factors that has led to the present recessionary climate.

At the same time the BRIC nations, along with the oil producers, are awash with US dollars. More are being printed daily, all with absolutely no backing other than the governments promise to repay. You may well ask –with what?

What is more the citizens of these emerging countries are in the saving habit, unlike their Western counterparts whose personal debt is obscenely high and whose only hope of repaying might be if their governments allowed inflation to follow the same path as Mr. Mugabe’s Zimbabwe!

Despite the writing being on the wall for the diminishing world economic status of the US, it still remains the single most influential driver of global economic activity and is likely to hold on to that position for a few more years yet.

• The first question to address as recession looms is will it be world wide? 

For the reasons given above we do not expect it to develop outside the US and other Western developed economies.

• The second question is by how much will BRIC and oil producing countries suffer as the West falls deeper and deeper into the recessionary trough?

Undoubtedly these economies will not escape unscathed but we believe that their currency reserves and industrial activity will serve at least two purposes.

They now have available all the resources that they require to modernize their internal infrastructure and their growing middle classes have the cash to support ongoing growth in services and amenities to Western standards.

The mountains of dollars they have accumulated over the years now puts their sovereign growth funds in the pole position to buy up or take control of many strategic US and European businesses that are or will fall on hard times as the recession takes its’ toll.

When the inevitable upturn in the economic cycle takes place we are likely to see a very different picture in terms of ownership of today’s’ major corporations, particularly in the finance sector that has been responsible for so much that is now becoming detrimental to our standard of living.

With this in mind there are a number of principles that investors should adhere to as recession bites and we have compiled a list of tips on how to invest during a global recession which you should consider.

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1. Look at major companies that trade around the world and are not dependent upon Western sources of revenue.
2. Avoid businesses that have anything but the barest minimum of debt.
3. Remember that in hard times even the most bombproof assets can take a hammering. Avoid property, most retailing, manufacturers and distributors of non-essentials.
4. Buy essentials to living such as utilities.
5. Beware of Bonds. Traditionally seen as safe investments during hard times. There is now a difference, and that is the relentless inflationary pressure building up as the printing presses continue to roll out the Dollars, Euros and Sterling. If the yields don’t match the rate of inflation you are losing money. Pick very carefully.
6. If you believe that a company is a buy the chances are that you believe that its market sector also has strength. Consider buying the sector ETF to cut down on the risk of an unexpected calamity falling on your pick.
7. Steer clear of risk. The best way for a non-professional to steer of risk is by only considering those companies that have strength in simple markets. Meaning that they should not be involved in complex products that may have a limited life before they are superseded by a competitor. Think Proctor & Gamble, Johnson &Johnson, Coca-cola.
8. We would be remiss if we neglected to mention precious metals in this context. People throughout the world have always considered gold as a safe haven during turbulent times. The problem with gold is that, unlike bonds or top class companies, it does not pay a dividend and can cost to store and insure. Nevertheless now a global recession has developed it will mean that most paper currencies, none of which are backed by gold or any other asset, will devalue as inflation takes hold. This is why many analysts are suggesting that the yellow metal will reach $1000 an ounce (currently circa $800 an ounce) before the year end and with an eventual high over $3000 an ounce. 5%-10% of your investment funds in Streetracks Gold Trust (GLD) is an option to consider. This ETF actually buys, sells and stores physical gold based on the spot price and value of the fund at any given time and is traded like any quoted stock or share. Take a look at Bullion Vaults if you prefer to buy and sell physical gold in your own name and store it in Zurich, London or New York.
9. Beware of miners, however bright you think the prospects are for the metal they produce, they are subject to many outside perils. Although the right miner can prove a very profitable investment they are speculative in recessionary times and are not for the faint hearted. By the same token take care with platinum, palladium and rhodium. Half of all platinum produced is used by the auto industry in catalytic converter exhaust systems. The industry is spending on research into replacing these metals with cheaper materials. If successful that is an awfully big chunk of demand down the swannee! If not, the Chinese, Indians, Russians and others are clamoring for cars as more and more of them join the affluent middle classes. After the recent massive drop in PGM prices it is only a matter of time before auto manufacturers buy back into the market, our guess is towards the back-end of 2009.
10. You should keep some cash in reserve for a rainy day. Anything can happen. You may lose your job or have an unexpected large medical bill. Life being what it is you can bet that if you have to liquidate one or more of your holdings it will be just at the wrong time.

To summarize, think companies manufacturing or distributing simple yet essential products, with good cash flow and little or no debt and have a worldwide market.

Diversify your holdings by spreading your risk via a favored market sector ETF, buy a little gold and keep some cash handy for a rainy day.

Get help finding the best life insurance rates on the internet.

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Have you noticed that in the last few days there has been a lot of talk amongst the cognoscenti that we are in a commodity boom bubble that is in the throes of bursting?

The pundits are not yet in full cry but there is a ground swell of ‘informed’ opinion that is beginning to paint the picture of oil retreating to below $100 a barrel, gold with $750 an ounce in their sights, even the soft commodities that feed the world and which have come off their tops recently are about to plunge.

Bursting bubbles are the latest fashion.

Having seen the dotcom crash, the housing bust, it is now becoming derigeur to see a bubble forming in every substantial rise in an asset class.

Fashion is a fickle thing, todays ‘in word’ can quickly become overused and become subject to ridicule, think of the over use of ‘awesome’ as an example.

Anybody now using that word as an exclamation is looked upon with a certain pity. Soon the use of a ‘bubble’ by commentators propounding the commodity boom bursting theory will meet with the same fate, or maybe even scorn.

Back to the future, oil supply will not satisfy demand even if American drivers give up their SUVs and cut down on their summer driving. ‘

Both China and India together with other emergent nations will more than take up the slack.

Then there is the rapidly escalating cost of current production, not to mention exploration and development. These factors are also common to just about every other commodity as the standard of living rises in the huge populations of the emerging countries.

We may see a blip as metals and oil are talked down and investors become nervous but when the going gets tough the tough get going. They will be buying commodities with every penny they can muster and raising their glasses to a continued commodities boom.

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Lets face it each and every one of is confronted by some aspect or other of investing time in research every day of our active lives.

Whether it is looking up a recipe to give the old man and the kids something different for dinner and costing the ingredients, deciding on a family holiday, choosing a mutual fund to tuck a little cash into for a rainy day, the best auto insurance deal, and even choosing clothes out of the closet each morning for every day wear, for the kids, for the light of your life, for a special occasion, to go shopping in, what to buy at the supermarket, to go to work in, to be fashionable, where to go for a meal, that every day list is endless.

Let’s take some forward steps in our thoughts about research.

Look at and analyze two of the most successful men in today’s business world.

Do you think that Bill Gates got where he is now without researching his market and his competition and using his research results to spot future trends that put Microsoft and its innovative products ahead of the game and has kept it the market leader.

His decisions could only have been decided by his evaluation of the results of comprehensive targeted research that gave him the edge over others who expected to compete with his company for that top spot.

Another of the world’s richest men, Warren Buffett, has made his fortune and those of many others who have followed his advice, purely by researching listed companies, commodities and currencies in depth and that conform to the parameters that he has developed over his many years of experience in the financial markets.

Mr Buffetts’ bottom line is whether an investment will become profitable and the answer to that question is simply his ability to spot trends by analyzing research. The result has been lots of money for Mr Buffett, his associates and his investors.

There are many men and women who have become very wealthy by researching the wants of the man or women in the street.

My favorite is Martha Stewart, who, despite her gaol sentence, made a fortune by knowing what Mrs Average American Woman wanted and needed to fulfill her role.

She may have started by instinct but her success was built and sustained by ongoing research (and hard work), pity she got greedy but she has bounced back. She knows her market by constant research and maybe a bit of gut feeling thrown in.

OK so what!

What are the lessons that we must take on board? To be successful in our entrepreneurial activities as investors or market speculators, it is not only necessary to research in depth our chosen subjects for prospective profitable opportunities but to also have the ability to evaluate the results to give us the parameters we will need to combine optimum profitability within a calculated time frame and minimize the downside chances of taking a loss.

This is the path to providing the income that we want, expect or need to achieve.

This summation needs thinking through, it is not simply research. It is essential to make sure that the research that we undertake is targeted and comprehensive and that we have a clear understanding of the objectives and pathways to profitability that link us in with the ultimate goal of minimizing the risk and making money from each and every financial decision we expect to profit from.

To do the business, know what you want to achieve, work at it today and every day, be determined to succeed, no short cuts on research, plan, be patient and not faint hearted, and when you do identify a developing trend and, who knows, you might amongst the first to get in on the ground floor, play it hard for all its worth.

Remember trends are, more often than not, cyclical, so keep researching keeping an eye open for the next trend and be prepared to dump that once great earner as it becomes exhausted and move on to the next opportunity.

To achieve the ultimate goal of financial independence think positive, learn from your mentors, think outside the box, conduct your research in depth and to specific parameters that you, and only you, believe will give you that all important edge that will maximize the ongoing profitability of your investment portfolio.

Finally a tip that I always use in timing when to get in or out of a speculative play and that also works well for longer term investment strategies.

Familiarize yourself with the basics of technical analysis, pay particular attention to the fundamentals of moving averages as they can give good timing signals relevant not only to the stock market but also to commodity and forex trading. 

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