Time to go buy-buy?

-- Linda Stern is a freelance writer. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern@aol.com --

By Linda Stern

WASHINGTON (Reuters) - When the going gets tough, the tough go shopping, right? Maybe it's time. Consumers and investors have been reining in their spending, and for good reason: They were over-extended, didn't have the cash and were worried about the risks on Wall Street and Main Street.

But the old stock market axiom that you should "buy when there's blood in the streets" may be apt now, and not just on Wall Street. The weak economy is producing sales on everything from sweaters to stocks. Here's how to deploy whatever cash you have.

-- A house. Don't let the bursting of the real estate bubble make you doubt the long-term pleasures of home ownership. Over time you'll build equity, and along the way you'll get tax breaks and a place to hang your hat. Mortgage rates are low, for now, and Washington has already approved tax breaks for first-time homeowners. Home prices have dropped significantly and are now at 2005 levels.

Can you take your time to house hunt? Probably. While experts suggest the housing market is closer to its bottom than its top, not very many of them are suggesting a quick recovery or runaway prices. And unless Congress opts to bail out troubled homeowners while it is rescuing banks, there are still more defaults, foreclosures and fire sales to come.

-- The next house. Pre-retirees who were thinking about Arizona, Florida, Las Vegas or other hot spots should shop now. These markets are flooded with condos on sale, partly because of speculators running for the exits, partly because of the aging of the population already in those condos. If you are thinking of making a move in the next five years, this is a good time to start shopping for that next place.

-- Some good stocks. When the stock market crashes, it takes everything with it, including share prices of good companies that will make you money in the future. That means its good to have some cash ready and a shopping list on hand.

What goes on the list? The Motley Fool is pointing at consumer staples, noting that the current bailout proposal could produce a recession and/or inflation, and companies that sell what consumers need have their own buffers. Morningstar says there are deals to be had in hardware, media, software and communications stocks.

Another idea: Exporting companies can boost their sales when the dollar is weak. Long-term investors can avoid making picks and simply continue to buy broad market index funds on the theory that those indexes will eventually recover. Is this rock bottom? Most pros say no. But after two weeks of sell-offs, it's likely prices are closer to the bottom than they are to the next top.

-- Cars, clothes, and anything else that will save you money. Every retailer from Abercrombie to Zappos is nervous about the newly circumspect consumer and is expecting a weak holiday season. So they're having constant sales. Don't go shopping if you still have a balance on your credit card. But if you've got the cash, look to drive bargains on tools, appliances and anything else that will be cost effective.

Auto site Edmunds.com is reporting that the deals on fuel-efficient (but not hybrid) cars make them pay for themselves in short order. Energy-efficient water heaters and air-conditioners make sense, too. You can get winter coats on sale before it gets cold. Don't shop without making the most of coupons that are out there. Check out the website deals.alltop.com to see who's got what on sale.

As with houses and stocks, you don't have to rush. The next few months will see more deals on clothing, household goods, appliances and autos.

(editing by Gunna Dickson)