The internet behemoth is well-positioned to weather an economic slump because it produces engaging goods to both business-to-business (B2B) and consumer markets.
What are some recession-proof investments?
- Assets, companies, industries, and other organizations that are recession-proof do not lose value during a downturn.
- Gold, US Treasury bonds, and cash are examples of recession-proof assets, whereas alcohol and utilities are examples of recession-proof industries.
- The phrase is relative since even the most recession-proof assets or enterprises might suffer losses in the event of a prolonged downturn.
Is Apple a recession-resistant investment?
Matt Frankel (Matt): We’ve all heard about Apple. I get the concerns: Apple is a large, very valued corporation. It trades for more than eight times sales, which is a lot for a consumer goods company of that size. iPhones are Apple’s main source of revenue. In the most recent quarter, iPhone sales accounted for nearly 47% of total revenue. To give you the rest of the breakdown, Mac sales accounted for 11%, iPads accounted for 10%, wearables and accessories accounted for 11%, and services accounted for 22%.
I like Apple because it has a very sticky environment that people will continue to participate in regardless of what happens, particularly the services industry, which is not only the second largest single source of income in the company, but it’s also rising quickly. That’s a dependable and consistent source of revenue, regardless of the state of the economy. My Apple Music bill will be paid every month even if we have a recession as we did in 2008 and 2009. When my kids smash the screen on my phone, I’m still going to update.
For Christmas, I’m still going to purchase my wife the latest Apple Watch. It’s a sticky ecosystem, and if you only have one product, you’re already a part of it, and you’ll just keep going. It’s a fairly recession-resistant firm in terms of consumer products, which is astonishing given how much pricing power Apple has on its products. Apple boasts a 25% net margin, which is nearly unheard of for a firm with such a diverse product mix. They have a lot of pricing power and a lot of profit margins.
To put Apple’s earnings in the red, it would have to be a really severe recession. They aggressively return capital to shareholders, spending $86 billion on share repurchases in the last four quarters. Eighty-six billion dollars is more than the market capitalization of thirty corporations. What do you have to say about Apple? I’m wondering as to why you guys gave it such a low rating.
Are oil stocks immune to a downturn?
As a result, energy stocks will almost certainly fall during a severe economic downturn, which is the classic trigger for a stock market crash. As a result, they’re not safe equities to keep during a market downturn, as they frequently endure even worse drops than the overall market.
In a crisis, what is the best asset to own?
During a recession, you might be tempted to sell all of your investments, but experts advise against doing so. When the rest of the economy is fragile, there are usually a few sectors that continue to grow and provide investors with consistent returns.
Consider investing in the healthcare, utilities, and consumer goods sectors if you wish to protect yourself in part with equities during a recession. Regardless of the health of the economy, people will continue to spend money on medical care, household items, electricity, and food. As a result, during busts, these stocks tend to fare well (and underperform during booms).
What is a recession-proof industry?
Healthcare, food, consumer staples, and basic transportation are examples of generally inelastic industries that can thrive during economic downturns. During a public health emergency, they may also benefit from being classified as critical industries.
What should I buy before the financial crisis?
Having a strong quantity of food storage is one of the best strategies to protect your household from economic volatility. In Venezuela, prices doubled every 19 days on average. It doesn’t take long for a loaf of bread to become unattainable at that pace of inflation. According to a BBC News report,
“Venezuelans are starving. Eight out of ten people polled in the country’s annual living conditions survey (Encovi 2017) stated they were eating less because they didn’t have enough food at home. Six out of ten people claimed they went to bed hungry because they couldn’t afford to eat.”
Shelf Stable Everyday Foods
When you are unable to purchase at the grocery store as you regularly do, having a supply of short-term shelf stable goods that you use every day will help reduce the impact. This is referred to as short-term food storage because, while these items are shelf-stable, they will not last as long as long-term staples. To successfully protect against hunger, you must have both.
Canned foods, boxed mixtures, prepared entrees, cold cereal, ketchup, and other similar things are suitable for short-term food preservation. Depending on the food, packaging, and storage circumstances, these foods will last anywhere from 1 to 7 years. Here’s where you can learn more about putting together a short-term supply of everyday meals.
Food takes up a lot of room, and finding a place to store it all while yet allowing for proper organization and rotation can be difficult. Check out some of our friends’ suggestions here.
Investing in food storage is a fantastic idea. Consider the case of hyperinflation in Venezuela, where goods prices have doubled every 19 days on average. That means that a case of six #10 cans of rolled oats purchased today for $24 would cost $12,582,912 in a year…amazing, huh? Above all, you’d have that case of rolled oats on hand to feed your family when food is scarce or costs are exorbitant.
Basic Non-Food Staples
Stock up on toilet paper, feminine hygiene products, shampoo, soaps, contact solution, and other items that you use on a daily basis. What kinds of non-food goods do you buy on a regular basis? This article on personal sanitation may provide you with some ideas for products to include on your shopping list.
Medication and First Aid Supplies
Do you have a chronic medical condition that requires you to take prescription medication? You might want to discuss your options with your doctor to see if you can come up with a plan to keep a little extra cash on hand. Most insurance policies will renew after 25 days. Use the 5-day buffer to your advantage and refill as soon as you’re eligible to build up a backup supply. Your doctor may also be ready to provide you with samples to aid in the development of your supply.
What over-the-counter drugs do you take on a regular basis? Make a back-up supply of over-the-counter pain pills, allergy drugs, cold and flu cures, or whatever other medications you think your family might need. It’s also a good idea to keep a supply of vitamin supplements on hand.
Prepare to treat minor injuries without the assistance of medical personnel. Maintain a well-stocked first-aid kit with all of the necessary equipment.
Make a point of prioritizing your health. Venezuelans are suffering significantly as a result of a lack of medical treatment. Exercise on a regular basis and eat a healthy diet. Get enough rest, fresh air, and sunlight. Keep up with your medical and dental appointments, as well as the other activities that promote health and resilience.
Do banks fare well during a downturn?
First, during a recession, interest rates tend to fall. Because banks’ principal business model is to lend money and profit, lower interest rates tend to result in reduced earnings. For instance, if a bank’s average vehicle loan interest rate is 5%, it will make significantly more money than if the average rate is 3%, all other circumstances being equal.
Second, and more importantly, during recessions, unemployment tends to rise, and more consumers get into financial difficulty. Consumers sometimes have difficulties paying their bills during recessions, which can result in an increase in loan losses for banks.
The longer answer, though, is that each bank is unique. Consumer banking (accepting deposits and lending money) is very cyclical, particularly for banks that specialize in riskier forms of lending like credit cards. Investment banking, on the other hand, performs even better during stormy times, therefore banks with strong investment banking businesses typically see profits hold up well. Goldman Sachs, for example.
What exactly is a blue chip stock?
A blue chip stock is a large corporation with a good reputation. These are usually large, well-established, and financially strong businesses that have been in operation for a long time and have consistent earnings, generally providing dividends to shareholders. A blue chip stock has a market valuation of billions of dollars, is usually the market leader or one of the top three corporations in its industry, and is almost always a household name. Blue chip stocks are among the most popular among investors for all of these reasons. IBM Corp., Coca-Cola Co., and Boeing Co. are examples of blue chip stocks.