Almost everyone lost money in the stock market during the 2008 Economic Crash. However, the worst thing you can do is pull out of market now and take the loss. I think, it is better to invest more money now but what and where to invest is the key since not everyone and every company is going to recover from this crash.

Analyzing the Situation:

1. Due to the war, US government has incurred 10 Trillion dollar debt.
2. US government is paying the interest on the current debt by issuing more bonds and printing more money.
3. US government is bailing out failed companies like Fannie Mae, Freddie Mac, Ford and Chrysler by printing money.

Since we are printing so much money (1 Trillion dollar from Sep 2008 to Jan 2009), I think the value of US dollar will go down. The commodity prices will go up in time and there might be a steep rise in inflation.

What’s different from the Great Depression?

Many people argue that the situation now is similar to the Great Depression and we can get out of it by bailing out companies like we did in 1930s. First of all we did not come out of the Great Depression by helping failed companies but by working hard, making products and exporting them. Back then US economy was 70% production and 30% consumption based. Right now it is mostly consumption and little production. In addition, the US Dollar was still based on Gold during the Great Depression so the government could not print any money; right now US Dollar is not based on Gold.

What not to invest in?

I recommend not investing in US bonds and treasuries. Due the surplus of US Dollar, I think the bonds, treasuries and the Dollar will loose value and purchasing power overtime.

Invest in Foreign CDs: CDs are always a good option to invest and have your money safe but if you invest in a CD in US Dollar, you might see your purchasing power go down as US Dollar loses value. I recommend investing in foreign CDs in foreign currencies such as Canadian Dollar, Swiss Franc and Japanese Yen.

Buy Commodity ETFs: I think it is now the right time to buy USO. Due to the surplus of US dollar, I think the dollar will loose value and commodities are going to go up in price. Crude Oil went down in price because of decrease in Oil demand. Crude Oil is at $36 per barrel and it will go up whether economy becomes better or dollar loses its value. Either way, I think Oil will go up in price in next 2 years. However, it is hard to catch the bottom of Crude Oil, so I recommend buying USO gradually over time. If you would like to invest $5000 for example in USO, invest 50% of it right now and invest 25% for every 2 dollar Crude Oil goes down in value.

Buy Foreign Stocks: Buy dividend paying foreign energy and mining stocks. These stocks went down in value because the entire world market went down but there is absolutely nothing wrong with these companies. Invest in the foreign large cap energy stock companies that have cash on hand, have positive Earnings per Share and pay dividends.

Buy Silver: Silver is valued at a less ratio compared to Gold then in the past. Silver is a great investment to hedge against currency devaluation and inflation.

Buy Gold: Even though gold has increased in value, I think Gold will continue to go up in value because of the surplus of US Dollar. I recommend investing about 10% of your money in Gold.

Percentage of Money Invested in each Sector (Recommendation)

Foreign CDs: 30%
SLV: 20%
USO: 20%
Foreign Stocks: 20%
Gold: 10%