Your Recession Proof Stocks....?

With the impending recession on the horizon (if it’s not already here going by the record layoffs this week), I’m looking to start tailoring some of my portfolio buys towards more “recession proof” stocks to try easy any losses.

So I’ll start with mine and that is - Kimberly Jones

The biggest supplier of toilet paper :roll_of_toilet_paper: and nappies in the world, owning some of the largest brands in that sector…no matter how tough times are you still need to wipe your …:man_shrugging:t3::smile:

As an aside, another fund I’ll be investing into is RoboGlobal, it’s clear that ai/automation is the future, just need to look at ford and nissan for example and the layoff of over 6,000 personnel, no doubt by design for them to be replaced by Robots :robot: price is low just now and I can only see this growing in the next 5+ years.

What will you be looking to invest in with the recession looming?

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Not sure I agree with the impending recession, but just my gut tells me there is likely to be one in the next 3 years, based on historical trends.

However, when there was a slight bond yield curve inversion a few months ago, I started looking up recession-proof stocks from the 2008 crisis. These were the results that stuck with me and their share price graphs showed that they were unphased by the recession.

Walmart - business increased for Walmart during the recession as more people started shopping at the discounter, which is the lowest cost place to buy essentials, food etc.
McDonalds - people kept going to Maccy D’s apparently, I don’t fully understand the logic, but the share price showed it
Drug companies - people who are reliant on medication keep buying it during whatever economic climate. It’s probably the last thing you’d stop buying before you run out of money

In the UK:

  • City of London Investment Trust
  • Reckitt Benckiser (Some of their brands neurofen, durex)
  • PZ Cussons
  • Unilever
  • Diageo (Recession or not people will buy alcohol)
  • Imperial Brands
  • Britvic
  • Merlin Entertainment
  • Big Yellow Group or Safestore (Self storage)
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There isn’t really such a thing as a recession proof stock. Even Kimberly-Clark was down -21% in 2008, with the bottom of its trough at just over -30%.

It’s also important to remember what happened during the last major recession. Yes, in 2008 shares took a pounding. However, people seem to forget that it was followed by a big bounce back in 2009, by the end of that year there were many stocks that were higher than they had been at the start of 2008, tech stocks like Apple especially.

One of the greatest investors of all time, Peter Lynch, has famously said ‘Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves’

Yes, it’s not nice when your positions are in the red, but it’s important to have a long term view. For me personally, a stock market correction is a great opportunity to pick up some bargains and add to my positions. For example, FedEx is down over 15% in the last month, putting me well in the red on that stock. I’m actually very happy because I’ve been able to add some more, allowing me to reduce my average cost basis and boost my yield on cost as I have a long term viewpoint.

So although recessions and stock market corrections happen, it’s a matter of having a long term viewpoint. Trying to pick which shares will do best might actually end up costing you money. Stock prices are not precisely linked with the company’s revenue and performance. They are based on what not-always-rational people are prepared to pay.

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Agree 100% with your post. I will still be dripping into the market with my usual monthly payments, even more so when stocks are really taking a beating. Can’t remember the Warren Buffet quote about buying when the majority are fearful, but you’ll know what one I’m referring to :+1:t3: And also the other quote I always refer to is “Time in the market, rather than Timing the Market”

Was just looking at add some diversed stocks to my portfolio that will still be valuable per say should there be a significant downturn. Many interesting replies already, thanks.

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During the 2008 recession I was nine, so although I remember the consequences I wasn’t buying and selling stocks :joy:
At the beginning of a recession is it worth selling your positions to buy later at a lower price or at the time is it hard to see and a bit too risky?

It’s impossible at the time to know when the lowest point has been reached.

If you want the opportunity to buy low without much risk or any need to predict the future, just keep a percentage of your portfolio in bonds or cash, and blindly rebalance once per year. If stocks are down, your rebalance will involve selling bonds to buy stocks.

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The thing is that no two recessions are the same. It depends on a lot of things and how is that going to affect the economy. For example bank stocks got destroyed in 2008, but were not that bad in 2000. On the other hand tech stocks got destroyed in 2000, but were in a better shape in 2008.

I agree with the sentiment here. It is impossible to time the market. However, to answer the OP’s question, i was told alcohol and sweet companies did very well during the last recession, especially in the UK. :grinning: (this is not even a joke!).

While it is hard to tell whether a ‘recession’ is coming, we’re undoubtedly in the late stage of the business cycle. At least for me i’m looking to ‘hedge’ this a bit by trimming my equity exposure and buy inflation protection (currently nothing is priced in in the US) and buy some UK REITs (high dividend pays, price was smashed due to brexit. no retail though)

A plus one for this. I’ve since moved out of this trust for a UK wind farm trust but I still keep an eye on it, it comes heavily recommended by most people I know in finance for it’s ever growing dividend!

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Bonds or cash. I think any other answer is susceptible to whatever the driving force of the recession is.If predicting equity markets is hard, predicting recessions are nigh on impossible

You can’t time the market.

YOU CAN’T TIME THE MARKET.

There’s a paper showing the effect of being out of the market for the best 20 positive days over a period of I think 10 years? It kills your performance. Those best days often occur in the middle of bear markets. Market timers sit around waiting for signs the market is picking up again, but in doing so they miss out on many of the key gaining days.

The only thing that matters is time in the market.

Edit to add: here’s one such article https://www.vanguardinvestor.co.uk/articles/latest-thoughts/investing-success/time-in-the-markets 1986-2016 missing the best 10 days, HALVES your return.

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CTY is one of my biggest positions on my SIPP now around 10% allocation of the overall portfolio. I just keep reinvesting its dividends since I’m not gonna get access to my SIPP money til I’m 57 anyway :grimacing:, might as well let the compounding do the work.

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Gold

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Lately I’ve gone for an approach of holding cash so I have reserves to buy the dip. With 10 - 20% of cash unallocated (on top of 3 month emergency stash) + monthly salary I should be able to take full advantage of a price crash without

a) hanging around for potentially years waiting for a crash before buying

b) Missing out on high-growth stocks by relying on low-risk assets.

Strong move. I’ve given my SIPP to a robo and just manage my ISA/GIA. That way when my retirement is terrible my wife can’t point the finger at me!

I moved out of CTY for UKW (Greencoat UK Wind) which aren’t really like for like’s at all, but I wanted to change up my exposures. I’ll see how it looks after a few years and might switch it back if I don’t see the growth I was hoping for.

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McDonalds
Alcohol, chocolates, staples - people always buy toothpaste, and apparently toys (HAS)
I’d also keep an eye on Dollar Tree and Five Below

The GOLD ticker used to be quite good, it had a strong negative beta, but since being acquired by Barrick… not so anymore :frowning:

Also, when Brexit happens, a very good chance the pound will suffer, so you need to think about currency hedging.

But this is my uninformed opinion :wink:

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