Greenspan – Recession – Stock Option Investing

Former Federal Reserve Chairman Alan Greenspan warned recently the U.S. economy’s next phase is recessionary. Mr. Greenspan did not specify when a recession might occur, but indicated it could be as early as the end of 2007.

The economy behaves in a cyclical manner: expansion, peak, contraction (recession) and trough. For example, if the last economic phase experienced is expansion, then the next phase is peak, followed by contraction, etc. So Mr. Greenspan’s comments aren’t so surprising, it’s kind of like saying “sunset follows sunrise”, it always happens that way. In the case of sunset/sunrise we know the timing of the event, but in the case of the economy, we don’t know the timing.

So what’s an investor to do about Mr. Greenspan’s comments? One solution is to simply exit the stock market, but it could be several years until we experience the next economic expansionary phase. We can take some solace in the fact there’s always a bull market somewhere, even in a recession.

We analyzed all of the optionable stocks during the most recent economic contraction to determine the ones performing well and the ones performing poorly during the recessionary period. The following table lists the various sectors of the economy and the percentage of companies performing well in the sector during the most recent economic recession:

From this table, it appears the companies to consider investing in during an economic recession are Financial, Utilities and Basic Materials. The sectors to consider avoiding during an economic recession are: Technology and Conglomerates.

The list of financial sector companies we found to have performed reasonably well during the previous economic recession are shown below.

It should be noted some of the companies in the list of financial companies haven’t performed very well lately, for example NFI and DRL.

The list of utility sector companies we found to have performed reasonably well during the previous economic recession are shown below.

The list of basic material sector companies we found to have performed reasonably well during the previous economic recession are shown below.

PowerOptions provides stock options search tools for finding potentially lucrative income producing investments. PowerOptions provides to the capability to search for stock options positions by sector/industry or remove a certain sector/industry. For example, an investor could search for just companies in the financial sector or the utility sector or in the basic materials sector.

PowerOptions provides the capability to search from a list of stocks, for example like the tables of stocks provided in this article. PowerOptions provides the capability to remove particular stocks, for example like NFI and DRL, which have not been performing very well as of late.

For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.

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[tags]Federal Reserve, Alan Greenspan, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options[/tags]