Are You Ready for a Downturn?

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics around the investing world.

John and David aren't saying that a downturn is for certain. They will let others make that call. But signs are pointing in that direction. So it's probably a good idea to prepare. A number of big, bellwether companies lowered their guidance recently, citing global economic concerns. Caterpillar reduced its long-term earnings guidance. Federal Express reduced its current-year outlook. And Nike said its growth would slow considerably. Investors can't ignore these warnings. Here's what investors can do. First, raise a little cash. Cash is a call option under these circumstances. Second, look for high-quality companies with solid balance sheets. They can provide ballast. Finally, investors should be researching companies they would like to own at lower prices. Two companies John and David would love to own at lower prices are athenahealth and Stratasys. The former continues to be a digital force in health care, and the latter is a leader in 3-D printing. Both would be welcome additions to the 10-Bagger portfolio.

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David Meier, John Reeves, and The Motley Fool have no positions in the stocks mentioned above. Motley Fool newsletter services recommend Athenahealth, FedEx, Nike, and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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