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Neopia's Fill in the Blank News Source | 17th day of Sleeping, Yr 23
The Neopian Times Week 26 > Articles > Recession: Will It Hit Your Portfolio?

Recession: Will It Hit Your Portfolio?

by geshtar

Welp, it looks like Neopia is heading into a time of economic recession. Games are offering less payout, the bank's cutting interest rates, and stocks are beginning to lose their value. If this trend continues, what will it mean for your stock portfolio? Have you diversified your investments? Is it time to liquidate your assets and furrow your money in gold and silver dubloons?

The answer is simple: Yes. If you don't do something now, you will find that a bag of NP won't go as far as it did three months before. Analysts like slushie31 & silver_specter have been predicting that this is going to be a long and sustained recession. It's more than likely that not only will some companies' stock will lose value, but some of these companies might even go bankrupt. You may see some company as powerful as BOOM! Boom boxes! go from being a blue chip stock to junk status, perhaps because of some questionable accounting practices. You know what they say: The bigger they are, the more friends they have. No, wait...

This recession won't just affect big companies either. Small businesses like Bobs Big Bonus Bingo and Balthazars Faerie Bottling Inc. will feel the pinch just as hard. Investors that rely on the "Pump & Dump" strategy of buying a low-priced stock at the same time everyone else does so, then selling when the stock price jumps up a couple of points may find themselves losing money as the stock prices fall below their usual bottoming prices. If you plan on investing I recommend that you invest for the long term. Don't panic if your stock loses some of its value; when the economy picks up so will the stock price.

If you wish to invest in low-risk ventures, then perhaps you should put your money into the Neopian National Bank. Although the bank may lower its interest rates during the recession, at least there's a guarantee of interest accumulation. Just be sure to keep enough money in the bank to gain interest

I suggest that you do not furrow assets into such things as gold and silver dubloons, and other commodity markets like coffee, tea, and paint brushes. During times of economic instability, these markets tend to fluctuate dramatically. Many folks lost hundreds of thousands of NP in the paint brush market when the price of rare paint brushes were overinflated, and then subsequently deflated when people competed for the lowest selling prices, and found no takers. Right now the same type of price inflation is occuring with gourmet foods & gold and silver Dubloons - I expect that these markets will collapse on themselves when the price war begins. However, if you choose carefully what item commodities you invest in, you might just find yourself making a profit even in a recession. Remember that commodity markets are driven by demand for the item - if there's an immediate need for more of the item its value will go up.

However, there is one good investment you can make that will encourage a faster economic turnaround, and make you a comfortable profit. Invest in the NeoPets' Sponsors, and give yourself and the NeoPets' staff an economic stimulus package!

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