Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How to Find Recession Proof Stocks

Stock-Markets / Sector Analysis Jul 20, 2010 - 07:35 AM GMT

By: Nilus_Mattive

Stock-Markets

Best Financial Markets Analysis ArticleIsn’t it amazing how quickly the mainstream media talk has turned from green shoots and recoveries to double-dip recessions and a whole laundry list of new economic worries?

The whimsical nature of the news aside, there certainly are plenty of reasons for concern as some of my colleagues have been pointing out in their recent Money and Markets columns:


Global shipping is grinding to a halt … consumers are hunkering down again … manufacturing measures are indicating a new slump in activity … and even China’s red-hot economy is now a bit less robust according to Beijing!

In short, now is the perfect time to revisit the areas of the stock market that traditionally hold up best when recessions strike. These are the very same areas that I’ve been emphasizing all along, even during the manic rally, and the very same groups of stocks that you should look at right now as storm clouds roll back over the economic landscape.

Before I get to the specific sectors and industries, however, I first want to note that I suggest sticking only to stocks that pay dividends at this point.

Reason: By their nature, income-producing stocks are a reliable way to weather all types of market hurdles and get non-refundable returns along the way.

Better yet, they tend to hold up much better than non-dividend-paying stocks … no matter what sector or industry you look at.

In 2002, for example, non-dividend stocks in the S&P 500 lost 30 percent while dividend-payers lost only 11 percent … and even during the height of the financial crisis in 2008, dividend payers outperformed by a full six percentage points.

Things Get Even Better When You Focus on The Right Dividend Stocks in Certain Parts of the Market

Many of the very same companies that pay the biggest dividends also provide products that people buy even when times are tough. Examples? Pharmaceuticals, electricity, and food.

And according to data from Standard & Poor’s, these are precisely the groups that have outperformed in past recessions.

Overall, the S&P 500 has lost an average of 21 percent during past recessions (excluding the latest one).

Meanwhile: 

blackhalfarrow Where to Find Recession Proof Stocks The average utility stock lost 15 percent and beat the market in 9 out of ten past recessions …

blackhalfarrow Where to Find Recession Proof Stocks The average health care stock posted a 7.3 percent decline and outperformed the market in 80 percent of the recessions, and …

blackhalfarrow Where to Find Recession Proof Stocks The average consumer staples stock lost just 2.4 percent, beating the market 90 percent of the time.

Average Stock Performances in Past Recessions

Yes, even the best-performing sector posted a loss … but if we get even more specific we can find pockets of companies that tend to gain ground even during economic slumps.

For example …

Alcoholic beverage makers not only beat the market in 80 percent of recessions prior to this one, they actually rose an average of 6 percent …

Household products manufacturers posted a gain of 1.8 percent and outperformed in every single instance, and …

And tobacco companies rose 9.6 percent and beat the market every time.

I can tell you from real-world experience that these trends have held through “The Great Recession,” too!

For example, tobacco company Altria produced a total return of 15 percent from my first recommendation on July 2, 2007 through May 28, 2010.

Now, are these hard-and-fast rules? Of course not. Just because a company operates in one of these traditionally recession-resistant industries doesn’t guarantee that its stock will go up (or even hold its ground).

In addition, there are some companies I consider great recession plays that operate outside these traditional safe havens — even in technology and retail!

But my point today is simple: Even if the economy continues to weaken from here, you do not have to completely abandon the entire market, especially if you’re looking for steady income.

Best wishes,

Nilus

P.S. I will be issuing the first recommendations for my brand-new Dad’s Income Portfolio service this Friday! So if you want to get on board before those income-boosting, recession-fighting plays go out … and get an entire year of additional recommendations for the special Charter Rate of $69 … I must hear from you by Midnight Eastern Time this Thursday. Click here now for all the details.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in