The Walt Disney Company (NYSE:DIS), like The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and Walmart Inc. (NYSE:WMT), is a recession-resistant company investors should look at today.
The best recession stocks include consumer staples, utilities and healthcare companies, all of which produce goods and services that consumers can't do without, no matter how bad the economy gets.
Historically, the industries considered to be the most defensive and better placed to fare reasonably during recessions are utilities, health care, and consumer staples.
Many of the businesses that do well during recessions either provide goods and services that increase in demand directly due to recession conditions or offer cheaper alternatives to luxuries or big-ticket purchases, or for which demand is relatively inflexible to changes in incomes.
Bonds and cash have historically outperformed most stocks during recessions. Selling stocks in favor of bonds and cash before a recession may leave you unprepared if stocks bounce back before the economy does, which has happened historically during many recessions.
Consumer discretionary companies
This sector can be particularly susceptible to recessionary pressures, as the economy slows and people start spending less. Consumer discretionary companies move more dramatically with consumer sentiment and economic cycles, which can worsen in times of financial uncertainty.
In general, a recession lasts anywhere from six to 18 months. For example, the Great Recession that started in December 2007 lasted 18 months. But the recession prompted by the pandemic in 2020 only lasted two months.
(NYSE:WMT) are often considered to be money-makers in times of recession. According to McKinsey report published in 2009, recession-resistant industries include consumer staples, healthcare, telecommunication services, and utilities, among more.
While gold prices may rise through a coming recession, there are a few different reasons why gold makes a good choice for investors during periods of economic downturn. For one, it's a great way to diversify.
Investors typically flock to fixed-income investments (such as bonds) or dividend-yielding investments (such as dividend stocks) during recessions because they offer routine cash payments.
When things are looking bleak, consider holding on to your investments. Selling during market lows can be one of the worst things you can do for your portfolio — it locks in losses. When the market evens out down the road, rebalancing may be in order.
By sector, communication services and real estate are the most undervalued sectors today, trading 30% and 22% below our fair values, respectively. Consumer defensive stocks, meanwhile, are about fairly valued.
The answer is no, according to advisors and investment analysts. "Allocating more funds to high-yielding CDs, money market funds, or treasuries may seem prudent; however, this is a form of market timing and should be avoided," explained Jonathan Shenkman of Shenkman Wealth Management.
Generally speaking, most experts recommend having at least three to six months' worth of living expenses saved up and easily accessible in case of emergency. This ensures that if there is a sudden loss of income, you will have enough cash on hand to cover your basic needs until you can find a job.
It's especially important to have savings during a recession, however, because economic uncertainty can create other financial concerns, such as layoffs. A surprise job loss can be stressful, but if you're cushioned with an emergency fund, it can be easier to pay for your expenses until you get a new position.
Michael Burry from “The Big Short” took a big bet when he shorted the American housing market. After the housing bubble crashed in 2008, he made $100 million for himself, with investors in his fund making a further $700 million.