Obama Re-Elected: One Way to Still Make Money

Post-election people are trying to figure out what will happen going forward and how it will affect them. In this uncertainty, there's a strategy gutsy investors can take advantage of to make some money. Be forewarned - disaster investing is not for the faint hearted.

Now that the election results are out, people are turning every which way to figure out what will happen in the future and how it will affect them. In this uncertainly, it is nice to know that there is something that has historically worked no matter which party was in office — disaster investing.

By disaster investing I mean putting money to use when no one else wants to because a catastrophe has happened and people are fearful. Frankly, this takes guts and is not for the faint hearted.

The key to taking advantage of disaster investing is to be prepared. Access to trades is essential as well as a plan established well before the calamity — not the day of. Our most recent financial crisis is an example. In early 2009 the Dow Jones was below 7,000. Today it is almost twice as much. A very gutsy person who invested as the market steadily marched down and hung on to her stock would have her investment paid back plus some.

From Yahoo Finance.com 11/06/2012

With this plan it is nearly impossible to buy at the low because no one can time the market successfully. Therefore, it is necessary to buy as the market plummets or for some, on the way up. For me, though, the trick is to hold on to the purchase after investing. When anxiety and self-doubt creep in, a good investment purchased as the market drops can be sold at the bottom out of fear. Then, the result is a tax loss instead of a gain.

Though it is mostly blogs that discuss the disaster investing notion rather than textbooks, one paperback is available about this concept. It is The Wall Street Journal Guide to Investing in the Apocalypse: Make Money by Seeing Opportunity Where Others See Peril by James Altucher and Douglas R. Sease (2011). The book has mixed reviews, but still could be of help for those who see the benefit of disaster investing and train themselves to attenuate inherent emotional responses.

There are always national and international disasters looming. When one happens, those with cash and a plan plus fortitude can make a lot of money. The sweet spot is that it’s legal. What’s not so pleasant is that it can be scary.

Read more:

Using Fear to Your Advantage

Fear and Investment Decisions: What to Do Now

How Much Cash?