- Inflation did not accelerate last month, but is still way above target and the economy is not out of the woods.
- Even in a recession, if you pick the right stocks, there is a chance of seeing a nice profit.
- Analysts have identified a basket of 15 stocks which crushed the S&P 500 in the 2008-2009 recession.
Inflation in the US finally showed signs of reaching a peak last month, but it remains way above target at 8.5%, and the economy is far from out of the woods.
The strong jobs market is the main thing keeping the economy from going from a technical recession into a full-blown official one, but there is little chance growth won’t slow significant as the Federal Reserve raises rates.
For investors, a lot of money can be made or lost during a recession. If you pick the right stocks there is a chance of seeing a big green number next to your portfolio even in a deep downturn.
As investors pull money from speculative investments such a tech, some of it finds its way into stocks that are insulated from economic downturns.
Analysts at global investing platform eToro have run the numbers and identified a basket of 15 US stocks that collectively outperformed the S&P 500 by 41% during the 2008 – 2009 global financial crisis and subsequent recession.
Just as impressive is the “all-weather” performance, noted Ben Laidler, global markets strategist at eToro. “The US recession stocks are up 833% since the eve of the global financial crisis through to the first half of 2022 versus only 170% for the S&P 500 and 360% for the Nasdaq,” he said.
“Losing less money is one thing; finding recession opportunities is another, but clearly, they exist. Many of the stocks we’ve picked have benefited in previous recessions from consumers trading down to cheaper products, saving money doing more of their own home and auto repairs, prioritising ‘low cost’ luxuries – from eating out to toys – and maintaining critical spending on healthcare.”
“Whilst past performance obviously can’t give us any promises for the future, looking at previous recessions and considering how consumers and businesses changed their purchasing behavior in response can help investors to make more informed decisions and fare better during these downturns,” Laidler added.
Here are the eToro analysts’ 15 picks.