So say we do have a depression or a really bad recession. History shows that only through massive government spending – in the 1930′s it was WWII coming along, gov’t spending for the war – can we get out of the trough. It’s pretty clear the Prez is spending like crazy. But keep in mind, that some of the expenditures are also investments. Investments in a big way. Investments we’d be wise to mirror in our own portfolios.
Not only that – but the idea is, these investments will spur the kind of re-growth that builds our economy back up but without the war and bloodshed. What exactly are our options here?
First – the green economy – green tech, green jobs – anything and everything green. Like it or not, industry new and old will have to be green. Believe in global warming or not, there is nothing wrong with making the world a cleaner place. In fact, it will make many, many people rich. And hopefully, provide a planet on which to enjoy this new wealth. Will you be in on it, is the question?
Many people argue that green investment and things like cap and trade is, in reality, a tax on consumers of electricity. But that misses some major points. For example, we do not account for the “externals”, that is, we are not paying for the destruction we commit when we burn coal and create other greenhouse gases. We must begin to pay because we can’t ignore the cost any longer. But also, with new green technology, the need to use dirty fuel will begin to lessen, so your costs as a consumer can go down through conservation and adopting green alternatives. You won’t pay a consumption tax on something you don’t consume!
And keep in mind – the horse and buggy industry collapsed when cars came along. The mass transit revolution was trashed by the government pushing cars and roads. So, here we are in another phase, where newer, better technologies are going to push out old dirty ones, and some companies will take a hit. But not for long, as alternatives come in like gangbusters into the marketplace.
Next, there’s health care. Through technology, there are major cost reductions to be had. The money is already flowing as part of the stimulus package.
A third investment the government is making is the auto industry. While it’s pretty volatile now, there’s a big commitment to making sure we don’t lose all three automakers. which one or ones are left standing will grow into the future. (Could the Feds be unwilling to let GM go due to the release of the Volt next year? That works both for a green play and an auto play..)
Fourth, infrastructure and “shovel ready” future investments. A lot of increase has probably been built into companies short term already, but considering that there are a lot of bridges to be rebuilt and schools and roads and so on, related industries are worth a look.
Ask yourself: What companies are on that bandwagon? What ETFs? What mutual funds? Look to invest in these in your 401(K), or start a self-directed IRA if you can’t invest in them through your workplace. Keep your eyes and ears open. Learn about the variety of investments out there. Don’t just save, but also conserve, put the money aside into investments that make sense in a depression scenario. Don’t be a victim of it, ride the wave instead.