How to Invest While Owning a Cyclical BusinessBy Jonathan T. Vree
Article Date: 03-01-2011
Copyright(C) 2011 Associated Equipment Distributors. All Rights Reserved.
Create a diversified portfolio that addresses your responses to four essential questions.
It's been a tough few years for the American economy, and for the cyclical business owner it has probably been even tougher. In the construction business, for example, we've seen total construction spending fall by more than 20 percent in the last three years, after having doubled over the previous 10. Overall profits have shown even more dramatic swings, and many businesses have been forced to operate in the red for some period of time.
The difficult business environment has also coincided with a wild ride for the overall stock market. From the high in 2007 through the end of 2010, the S&P 500 fell by 58 percent, rose by 89 percent, and left the market with an overall return of down 20 percent. Investing in a volatile stock market while having large changes in income can create a specific set of problems for a cyclical business owner. What should the owner do?
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