SlideShare a Scribd company logo
1 of 20
By: www.ProfitableInvestingTips.com
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
The Fed is raising interest rates in an attempt to tame
the highest inflation in forty years. More often than
not, significant interest rate hikes result in a
significantly slowed economy and a recession. After
the Fed increased rates by 0.5% in May inflation
measured by the CPI went up 8.6% year on year.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
Thus, the Fed increased the increase to 0.75% after its
June FOMC meeting. Will this level of increases
month by month do the trick or will they have to go
the Paul Volcker route of forty years ago with a multi-
point rate increase? When the Fed did that it caused a
recession and employment numbers did not come
back for seven years.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
Chairman Powell noted that the Fed can only deal with
monetary issues and not with the supply chain
disruption caused by Russia’s war in Ukraine and
China’s recurring lockdowns. Thus, investors ought to
be investing for a recession instead of a continued era
of low rates and easy money.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
Market Anticipates Recession
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
The economy had been recovering from the Covid-19
pandemic. Unfortunately, the large pent up demand in
the USA was answered by supply chain glitches. These
were further complicated by lockdowns in China, war
in Ukraine and significantly higher prices for oil,
natural gas, fertilizers, wheat, corn, and many strategic
minerals.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
None of this upset the markets so much as the prospect
of higher interest rates causing a recession. Stock
prices eventually end up being determined by
fundamentals. But, day by day prices are determined
by market sentiment and what investors and traders
think will happen. Right now, because the market
anticipates recession in response to higher rates it is
driving stocks into bear market territory and even
lower.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
Stocks That Will Be Hurt During a Recession
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
During a recession people may not want to buy a car,
new TV set, or fancy new iPhone. They do, however,
keep buying laundry soap, shampoo, food, medicine,
and beer. What consumers do is adjust their spending
habits to spend less. Kenzie Academy looks at winners
and losers during a recession.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
The retail sector is commonly hurt when consumers cut
back on and adjust spending. Low-end retailers like
Walmart are typically hurt less than high end retailers.
As discretionary spending tightens, people stop eating
out and restaurant chains are hurt. Fast food
franchises are hurt less than high-end restaurants.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
As people travel less, airlines, rental car companies and
hotels get hurt. Many of these are still hurting from
the pandemic. Tech companies not only survived the
Covid Crash but prospered. This time around there is
no “free money” from the Fed propping things up.
Thus, overpriced stocks in the tech sector will likely
fall until their stock prices match their fundamentals
which helps explain why the Nasdaq has fallen more
than 32% year to date as of June 16, 2022.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
Stocks That Will Do Well During a Recession
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
Normally when there is a recession people and
businesses drive less, turn down their thermostats, and
generally consume less energy. Thus, oil and natural
gas stocks go down during a recession. This time
around one of the causes of the recession will be the
scarcity of oil and natural gas on world markets due to
fallout from the war in Ukraine. Thus, Exxon Mobil is
up around 50% year to date.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
This stock could fall a bit as the economy slows
significantly but not so much as would usually happen
as the Ukraine war will prop it up. Once there is no
more war in Ukraine the economy will start to recover,
interest rates will go down, and that will help keep
energy prices up.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
The S&P health sector is down nearly 15% year to date
but can be expected to stand up better than other
sectors as the economy slows. Individual stocks in
biotech could do exceptionally well if they come up
with new medications, vaccines, and other treatments
for major diseases.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
What Is Your Investment Time Frame?
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
If a person had purchased an ETF that tracks the S&P
500 on October 12, 2007 for $1561 that would have been
at the market peak before the crash that ushered in the
Great Recession. The S&P 500 subsequently fell to 756
in February of 2010. However, anyone who held their
investment until today would see the S&P 500 at 3683
despite a fall of 1000 points since the start of the year.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
The point is that recessions come and go but the
American economy keeps producing value for
investors who stay the course. It certainly would have
been a better investment to buy at the market low of
756 and sell at the market high at the beginning of
2022.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
However, market timing is never perfect for anyone.
What has proven to work over the years is an
assessment of intrinsic value in determining which
stocks to buy, hold, or sell. If you have a long term
investment time frame investing for a recession
involves waiting as stocks fall in price and then buying
stocks with strong intrinsic value at bargain prices
with the intention of holding them for years.
https://profitableinvestingtips.com/profitable-investing-
tips/investing-for-recession
For more insights and useful information about
investments and investing, visit
www.ProfitableInvestingTips.com.

More Related Content

Similar to Investing for a Recession

WTWealth_7-2015V2 (1)
WTWealth_7-2015V2 (1)WTWealth_7-2015V2 (1)
WTWealth_7-2015V2 (1)
John Heilner
 
The Advisory_Sept2016
The Advisory_Sept2016The Advisory_Sept2016
The Advisory_Sept2016
Jim Tyson
 
A Checklist for Wanna-be Helicopter Pilots
A Checklist for Wanna-be Helicopter PilotsA Checklist for Wanna-be Helicopter Pilots
A Checklist for Wanna-be Helicopter Pilots
Andrea Iannelli
 
Case for International
Case for InternationalCase for International
Case for International
John Heilner
 
Newsletter 080315 Final Volume 1 Issue 6
Newsletter 080315 Final Volume 1 Issue 6Newsletter 080315 Final Volume 1 Issue 6
Newsletter 080315 Final Volume 1 Issue 6
Jonathan M. Lamb
 
Global Macro Shifts_FTI
Global Macro Shifts_FTIGlobal Macro Shifts_FTI
Global Macro Shifts_FTI
Calvin Ho
 

Similar to Investing for a Recession (20)

How Could Debt Destroy Your Investment Portfolio?
How Could Debt Destroy Your Investment Portfolio?How Could Debt Destroy Your Investment Portfolio?
How Could Debt Destroy Your Investment Portfolio?
 
How Will the Pandemic Change the Economy?
How Will the Pandemic Change the Economy?How Will the Pandemic Change the Economy?
How Will the Pandemic Change the Economy?
 
Price of Taming Inflation
Price of Taming InflationPrice of Taming Inflation
Price of Taming Inflation
 
Finlight Research - Market Perspectives - Jun 2016
Finlight Research - Market Perspectives - Jun 2016Finlight Research - Market Perspectives - Jun 2016
Finlight Research - Market Perspectives - Jun 2016
 
WTWealth_7-2015V2 (1)
WTWealth_7-2015V2 (1)WTWealth_7-2015V2 (1)
WTWealth_7-2015V2 (1)
 
Reby Advisors Fall 2020 Newsletter
Reby Advisors Fall 2020 NewsletterReby Advisors Fall 2020 Newsletter
Reby Advisors Fall 2020 Newsletter
 
The Advisory_Sept2016
The Advisory_Sept2016The Advisory_Sept2016
The Advisory_Sept2016
 
A Checklist for Wanna-be Helicopter Pilots
A Checklist for Wanna-be Helicopter PilotsA Checklist for Wanna-be Helicopter Pilots
A Checklist for Wanna-be Helicopter Pilots
 
EIU Global Forecast Report Q4/2020
EIU Global Forecast Report Q4/2020EIU Global Forecast Report Q4/2020
EIU Global Forecast Report Q4/2020
 
Business, People, and COVID: A Roadmap
Business, People, and COVID: A RoadmapBusiness, People, and COVID: A Roadmap
Business, People, and COVID: A Roadmap
 
Micro-Macroeconomics
Micro-MacroeconomicsMicro-Macroeconomics
Micro-Macroeconomics
 
Current Thinking, Q1 2015
Current Thinking, Q1 2015Current Thinking, Q1 2015
Current Thinking, Q1 2015
 
2015.11 IceCap Global Market Outlook
2015.11 IceCap Global Market Outlook2015.11 IceCap Global Market Outlook
2015.11 IceCap Global Market Outlook
 
AES_DECEMBER
AES_DECEMBERAES_DECEMBER
AES_DECEMBER
 
Brent woyat q2 2014 pimg commentary jul2014
Brent woyat q2 2014 pimg commentary jul2014Brent woyat q2 2014 pimg commentary jul2014
Brent woyat q2 2014 pimg commentary jul2014
 
Case for International
Case for InternationalCase for International
Case for International
 
2010 outlook
2010 outlook2010 outlook
2010 outlook
 
Newsletter 080315 Final Volume 1 Issue 6
Newsletter 080315 Final Volume 1 Issue 6Newsletter 080315 Final Volume 1 Issue 6
Newsletter 080315 Final Volume 1 Issue 6
 
2015 Year End Outlook
2015 Year End Outlook2015 Year End Outlook
2015 Year End Outlook
 
Global Macro Shifts_FTI
Global Macro Shifts_FTIGlobal Macro Shifts_FTI
Global Macro Shifts_FTI
 

More from InvestingTips

More from InvestingTips (20)

When to Buy and When to Sell Bitcoin
When to Buy and When to Sell BitcoinWhen to Buy and When to Sell Bitcoin
When to Buy and When to Sell Bitcoin
 
Dangers of Investment Leverage
Dangers of Investment LeverageDangers of Investment Leverage
Dangers of Investment Leverage
 
Are Private Digital Tokens On Their Way Out?
Are Private Digital Tokens On Their Way Out?Are Private Digital Tokens On Their Way Out?
Are Private Digital Tokens On Their Way Out?
 
When Should Investors Trade Options?
When Should Investors Trade Options?When Should Investors Trade Options?
When Should Investors Trade Options?
 
Will Northrup Grumman Go Into Commercial Aviation?
Will Northrup Grumman Go Into Commercial Aviation?Will Northrup Grumman Go Into Commercial Aviation?
Will Northrup Grumman Go Into Commercial Aviation?
 
How Would a Crypto Privacy Pool Work?
How Would a Crypto Privacy Pool Work?How Would a Crypto Privacy Pool Work?
How Would a Crypto Privacy Pool Work?
 
How CFTC Rules Protected a Crypto Business
How CFTC Rules Protected a Crypto BusinessHow CFTC Rules Protected a Crypto Business
How CFTC Rules Protected a Crypto Business
 
Blockchain Tech in the Wake of Crypto Winter
Blockchain Tech in the Wake of Crypto WinterBlockchain Tech in the Wake of Crypto Winter
Blockchain Tech in the Wake of Crypto Winter
 
Economic and Investment Risks for 2024
Economic and Investment Risks for 2024Economic and Investment Risks for 2024
Economic and Investment Risks for 2024
 
Can Stablecoins Be Self-regulating?
Can Stablecoins Be Self-regulating?Can Stablecoins Be Self-regulating?
Can Stablecoins Be Self-regulating?
 
Bitcoin Viability As a Long Term Investment
Bitcoin Viability As a Long Term InvestmentBitcoin Viability As a Long Term Investment
Bitcoin Viability As a Long Term Investment
 
Bitcoin Versus NFTs
Bitcoin Versus NFTsBitcoin Versus NFTs
Bitcoin Versus NFTs
 
Would a Digital Dollar Hurt Banks?
Would a Digital Dollar Hurt Banks?Would a Digital Dollar Hurt Banks?
Would a Digital Dollar Hurt Banks?
 
Will 2024 Be a Good Year for Crypto?
Will 2024 Be a Good Year for Crypto?Will 2024 Be a Good Year for Crypto?
Will 2024 Be a Good Year for Crypto?
 
Should You Diversify Your Crypto Investments?
Should You Diversify Your Crypto Investments?Should You Diversify Your Crypto Investments?
Should You Diversify Your Crypto Investments?
 
Obligations of a Crypto Business
Obligations of a Crypto BusinessObligations of a Crypto Business
Obligations of a Crypto Business
 
Does Crypto Finance Terrorism?
Does Crypto Finance Terrorism?Does Crypto Finance Terrorism?
Does Crypto Finance Terrorism?
 
Are Smart Contracts Legal?
Are Smart Contracts Legal?Are Smart Contracts Legal?
Are Smart Contracts Legal?
 
Can the Law Fix Crypto’s Problems?
Can the Law Fix Crypto’s Problems?Can the Law Fix Crypto’s Problems?
Can the Law Fix Crypto’s Problems?
 
Apple as a Model for Crypto’s Future
Apple as a Model for Crypto’s FutureApple as a Model for Crypto’s Future
Apple as a Model for Crypto’s Future
 

Recently uploaded

Forbes Senior Contributor Billy Bambrough Master of Tech Journalism.pdf
Forbes Senior Contributor Billy Bambrough  Master of Tech Journalism.pdfForbes Senior Contributor Billy Bambrough  Master of Tech Journalism.pdf
Forbes Senior Contributor Billy Bambrough Master of Tech Journalism.pdf
UK Journal
 

Recently uploaded (8)

Forbes Senior Contributor Billy Bambrough Master of Tech Journalism.pdf
Forbes Senior Contributor Billy Bambrough  Master of Tech Journalism.pdfForbes Senior Contributor Billy Bambrough  Master of Tech Journalism.pdf
Forbes Senior Contributor Billy Bambrough Master of Tech Journalism.pdf
 
13052024_First India Newspaper Jaipur.pdf
13052024_First India Newspaper Jaipur.pdf13052024_First India Newspaper Jaipur.pdf
13052024_First India Newspaper Jaipur.pdf
 
Income Tax Regime Dilemma – New VS. Old pdf
Income Tax Regime Dilemma – New VS. Old pdfIncome Tax Regime Dilemma – New VS. Old pdf
Income Tax Regime Dilemma – New VS. Old pdf
 
Top^Clinic ^%[+27785538335__Safe*Women's clinic//Abortion Pills In Musina
Top^Clinic ^%[+27785538335__Safe*Women's clinic//Abortion Pills In MusinaTop^Clinic ^%[+27785538335__Safe*Women's clinic//Abortion Pills In Musina
Top^Clinic ^%[+27785538335__Safe*Women's clinic//Abortion Pills In Musina
 
Press-Information-Bureau-14-given-citizenship.pdf
Press-Information-Bureau-14-given-citizenship.pdfPress-Information-Bureau-14-given-citizenship.pdf
Press-Information-Bureau-14-given-citizenship.pdf
 
19052024_First India Newspaper Jaipur.pdf
19052024_First India Newspaper Jaipur.pdf19052024_First India Newspaper Jaipur.pdf
19052024_First India Newspaper Jaipur.pdf
 
Decentralisation and local government in India
Decentralisation and local government in IndiaDecentralisation and local government in India
Decentralisation and local government in India
 
Analyzing Nepal's Third Investment Summit.pdf
Analyzing Nepal's Third Investment Summit.pdfAnalyzing Nepal's Third Investment Summit.pdf
Analyzing Nepal's Third Investment Summit.pdf
 

Investing for a Recession