Doomsday, Fiscal Cliff Panic, and Other Investable Opportunities
Unfortunately for doomsday preppers everywhere, the world hasn't ended. People who invested a lot of money on things like freeze-dried foods and disaster-proof bunkers may be a little disappointed today. It's a bitter pill to swallow to sit inside a bunker eating the special limited-edition Hostess Twinkie slated for the apocalypse, staring at a stockpile of survivalist goods, knowing life's going on out there.
Many believed that the end of the Mayan calendar indicated that today would mark the end of the world. Whether you think the theory was valid or think the whole idea's absurd, the doomsday preparation trend actually has helped some companies' sales of survivalist products go through the roof. Even mainstream big-box stores like Costco were able to capitalize from panicky prep buying: The Wall Street Journal recently reported that Costco's sales of food-storage products and foods with long shelf lives jumped by triple digits this year.
Of course, even though the Mayans got it wrong (or just decided to stop messing with the dang calendar already), people always find plenty of reasons to think doom's right around the corner. (I'm guilty of it sometimes too, having a gloomy disposition much of the time.) The fiscal cliff talks' current stalemate is causing many stocks to plunge, in a whole other doom-and-gloom scenario.
As opposed to "panic buying" of canned goods, guns, and batteries, many investors are "panic selling" stocks in the face of what is being perceived as imminent disaster. As gloomy as I may get sometimes, I think that's a big mistake.
Uh-oh, 2013 has a 13
Economic disaster is an end-times scenario that has nothing to do with ancient cultures' calendars, so all is not lost for those who have invested in the means to hunker down for the worst.
Still, consider the idea that maybe the smartest long-term preparedness plan is to buy productive assets like stocks, not MREs -- and make sure you're choosing the best stocks that likely won't suffer spoilage over years' times.
Days like today -- when House Republicans have decided not to go forward with a fiscal cliff vote -- give us the uncertainty that puts many stocks on sale. That means many companies' stock prices are getting slashed for macro reasons, not weaknesses intrinsic to their individual businesses.
Granted, I'm not saying this is a great situation right now. Taxation and spending issues will affect the economy going forward. I also will honestly say I believe that 2013 could be an extremely difficult year for corporations, individuals, and the U.S. economy at large (and not just because it contains a 13, of course).
Still, instead of panicking about end-times, let's do this: Let's assume the world won't end. Let's not sell our stocks unless we believe they're truly weak companies. Investors should take the current panic as an opportunity to buy high-quality companies to hold for the very long term, unless something goes terribly wrong with the companies' fundamental businesses in the meantime.
In other words, let's assume that as difficult as things might get, we will likely survive, and strong companies will too. Here are a few stock ideas for the current situation.
For a while there, Apple seemed like the only stock any American portfolio needed. Lately, it's seen the opposite sentiment, shrouded by pessimism. Given the fact that Apple shares are now trading at a ridiculously low nine times forward earnings, with a PEG ratio of 0.52, that may be one of the no-brainers of the century, apocalypse or no.
Chipotle's share price has been taken to the woodshed in 2012, but it's time to wonder if the company's situation is really that bad. The company has a strong brand and a lofty mission. For consumers who are looking for food on the run, its fare won't break the bank, even if times are tough next year and beyond.
The aforementioned Costco is one of the best companies I can think of. Although I think there could be better price opportunity forthcoming for patient investors, it's a great company with a strong future. Its range of customer demographics also makes it a particularly strong big-box stock pick; it appeals to bargain-hunters, small-business owners, and, apparently, some doomsday preppers. (Bulk items like Pop-Tarts could indeed come in handy during an apocalyptic scenario.)
As for stocks that are getting beatdowns like Research In Motion : thumbs down. I doubt that company can survive any doomsday, given the fact that it's been giving plenty of signs of being the designer of its own undoing in the marketplace.
Amidst all the panic, it still pays to be careful.
Prepping for the world going on
Granted, the world as we know it could end -- all kinds of things could happen -- but it's a better bet that such an outcome would be a long and drawn-out process, not some sudden cataclysm on a particular day like Dec. 21, 2012.
Stephen Hawking has often mentioned the likelihood that a doomsday scenario would be brought about by the human race's own actions, by letting climate change or nuclear technology go unchecked.
That's why investors should make sure that the stocks they invest in are not only high-quality companies, but also the ones that can make a difference in building a better world, not continuously perpetrating the damage of short-term thinking and disastrous long-term results.
In the cases of buying shares of companies like Apple, shareholders can also push for better environmental and social policies; that's another benefit of owning shares of a public company as opposed to just hunkering down in doomsday shelters to await the end of the world.
The best way to prepare is to be ready for a reasonable future. Panic only results in being left high and dry when tomorrow does arrive, right on schedule.
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The article Doomsday, Fiscal Cliff Panic, and Other Investable Opportunities originally appeared on Fool.com.Alyce Lomax owns shares of Chipotle Mexican Grill. The Motley Fool owns shares of Apple, Chipotle Mexican Grill, and Costco Wholesale. Motley Fool newsletter services recommend Apple, Chipotle Mexican Grill, and Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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