What stocks go up in a depression?
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.
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.
Purchase Precious Metal Investments.
Precious metals, like gold or silver, tend to perform well during market slowdowns. But since the demand for these kinds of commodities often increases during recessions, their prices usually go up too. You can invest in precious metals in a few different ways.
| Company | Industry | Return, 1932 to 1954 |
|---|---|---|
| International Paper & Power | Paper, hydroelectric power | 30,501% |
| Spicer Manufacturing | Auto parts | 26,221% |
| Bulova Watch | Watches | 24,146% |
| Zenith Radio | Radios, televisions | 24,146% |
The best performing investments during the Depression were government bonds (many corporations stopped paying interest on their bonds) and annuities.
Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid assets with minimal risk, such as Treasury bills, money market funds and certificates of deposit. Money market funds and high-yield savings are also places to salt away cash in a downturn.
Yes, cash can be a good investment in the short term, since many recessions often don't last too long. Cash gives you a lot of options.
Luckily, there are some stocks that are more resilient to the negative effects of a downturn. Three stocks that outperformed the S&P 500 during the 2007-09 Great Recession were Gilead Sciences (GILD -0.31%), McDonald's (MCD -0.07%), and Walmart (WMT 0.22%).
| Stock | Implied upside from Feb. 21 close |
|---|---|
| Walmart Inc. (ticker: WMT) | 4.8% |
| Abbott Laboratories (ABT) | 6.9% |
| Synopsys Inc. (SNPS) | 6.3% |
| Accenture PLC (ACN) | 3.6% |
An emergency fund of six months will help you face potential financial hardships. In addition, during recessions, people with access to cash are in a better position to take advantage of investment opportunities that can significantly improve their finances long-term.
Who got rich during the Great Depression?
Not everyone, however, lost money during the worst economic downturn in American history. Business titans such as William Boeing and Walter Chrysler actually grew their fortunes during the Great Depression.
Those wealthy whose wealth was all in the stock market or was highly leveraged, lost everything. However, not every wealthy person had all their assets in the stock market or leveraged with debt. Many wealthy people owned land and buildings, all debt free. Many had lots of cash.
Cash, large-cap stocks and gold can be good investments during a recession. Stocks that tend to fluctuate with the economy and cryptocurrencies can be unstable during a recession.
| Company | Symbol | Average % stock ch. last five recessions |
|---|---|---|
| Boeing | (BA) | -33.4 |
| Baker Hughes | (BKR) | -31.2 |
| Schlumberger | (SLB) | -30.8 |
| American Electric Power | (AEP) | -13.5 |
The TVA (Tennessee Valley Authority) provided jobs and brought electricity to rural areas for the first time. The FERA (Federal Emergency Relief Administration) and the WPA (Works Progress Administration) provided jobs to thousands of unemployed Americans in construction and arts projects across the country.
The S&P 500 usually declines significantly during recessions. However, buying stocks during economic downturns can lead to big gains over the long run.
In the mid-2000s, Burry was famous for placing a wager against the housing market and profited handsomely from the subprime lending crisis and the collapse of numerous major financial entities in 2008.
"Then you can absorb these kinds of pullbacks," said Joseph Eschleman, president of Towerpoint Wealth in Sacramento, Calif. "Cash adds 'Bubble Wrap' to your portfolio," he said. And having cash handy is vital during a recession in case of a job loss or other reduction in income.
Investing in precious metals like gold and silver during an economic crash is a strategy some people consider because these metals have historically been seen as stores of value and hedges against inflation and economic uncertainty.
What Are the Biggest Risks to Avoid During a Recession? Many types of financial risks are heightened in a recession. This means that you're better off avoiding some risks that you might take in better economic times—such as co-signing a loan, taking out an adjustable-rate mortgage (ARM), or taking on new debt.
Can you lose money in a savings account during a recession?
It's safe from the stock market: If a recession causes short-term market volatility, you won't lose money on your high-yield savings deposits, unlike investing in the stock market. The APY will be working for you regardless (though it could be lower than the rate you had when you opened the account).
The phrase means that having liquid funds available can be vital because of the flexibility it provides during a crisis. While cash investments -- such as a money market fund, savings account, or bank CD -- don't often yield much, having cash on hand can be invaluable in times of financial uncertainty.
Companies in the business of providing tools and materials for home improvement, maintenance, and repair projects are likely to see stable or even increasing demand during a recession. So do many appliance repair service people. New home builders, though, do not get in on the action.
Lower prices — A recession often hits after a long period of sky-high consumer prices. At the onset of a recession, these prices suddenly drop, balancing out previous long inflationary costs. As a result, people on fixed incomes can benefit from new, lower prices, including real estate sales.
| ASSET | YEAR | % RETURN |
|---|---|---|
| Sanara MedTech (SMTI) | 2008 | 231.68% |
| Mexco Energy (MXC) | 2008 | 209.75% |
| Kirkland's (KIRK) | 2008 | 178.95% |
| Duos Technologies (DUOT) | 2008 | 160% |
