Scores have been reeling as this economy has slipped from its lofty highs. What started out as a severe pullback has turned into what is now agreed upon as The Great Recession of the 21st Century. While the look-backs are saying “how did this happen?” those with an eye towards optimism are asking themselves, “How do we recover?” What I’m doing this year is doubling up on my work and doubling down on my sagging investments so that I can strengthen my financial picture and my position in 2011 and beyond.
I have recently taken on work again. Overnight in a hotel. Of course, my full time employer can only offer me 40 hours a week. What I have done is gotten a second overnight job on my days off. I am working seven days a week until I reach my goals in terms of earnings. With one job this would have taken until June or later, but with two jobs I will be able to reach my goals in early April or sooner. Doubling up on work when the work is there is a great idea and a great way for anyone to recover from the pain of the recession.
Doubling down on your investments is also a good idea. As all investors know, you can’t ever get back what is no longer there. If you had a share of stock that you bought at $20 and sold at $10, then you’ve lost half your investment. So there’s no use crying over sold stock. However if you are holding onto stock that still has intrinsic value but is just “underwater,” then you always have the ability to double down.
Take the previous example. If your $20 stock is trading at $10 and appears to have bottomed out, you can buy another share of stock at $10 and double down. This means that the stock’s value only needs to get back to $15 for you to break even. Of course, the more you can buy, the lower your threshold for having to break even.
Say you buy 10 shares at $10 so now you have spent $120 on stock that’s worth $110. Now the share price only needs to reach $10.91 for you to break even. Doubling down on the sagging investments still in your portfolio may be the best way to start 2011 off with a bang.
Another reason holding onto stock for a long time is, historically a good idea is that the value of good companies has always generally gone up. If you’re holding onto weak performing stock and you double down to lower your average, when things turn around for the company, you will be there to reap the rewards. Holding onto stock for extended periods of time also has tax advantages which should be utilized.
Of course every persons journey is different and not too many people are invested in the stock market directly. However if you are invested in the stock market, doubling down on your investments can pay dividends in the long run. Even if you’re just working, finding extra work, working extra days, and working overtime can help strengthen your financial position in 2011 and beyond.
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