I just received our quarterly statements, and we got hit pretty hard in our retirement accounts, but it could have been much worse. Last November, I put 30% of our portfolio in cash after seeing this article about bond-market's red warning light. What worried me the most was that the FEDS were artificially inflating the stock market without any corrections, and banks had artificially inflated the real estate market, I knew this was a ticking time bomb.
What are the stock signals for a recession?
The bond-market warning light started flashing red, and the last time that happened, we had the biggest sell-off. Most of the time, these types of articles can raise red flags but we rarely take action. Then, in January, Chuck Schumer calls on the feds to declare the coronavirus outbreak a public health emergency. Now, you have three warnings, but more importantly, you have time urgency.
That is the signal to move your stock portfolio around, and sell off the airlines, cruise companies, and restaurants. I added another 30% to cash and now have cash waiting to invest in something.
What markets are rising during the coronavirus pandemic?
Let's discuss.
Stock Categories that are Rising and Falling During the Coronavirus
Take a look at this chart. When you look at the living situation of hundreds of millions of people stuck in their houses, you start to understand what people are buying. Fitness and gym equipment for their home gyms. Hospitals and nursing industries. People are looking for companion pets. Companies that thrive on groups settings are going to see the biggest impact: thrift stores, shopping centers, theme parks.
Keep in mind that the companies that take the hardest hit will go from $60 to $15 to $30 to $45 to $60 within the next two years. This opens up an opportunity for you to quadruple your investments over the next two years.
What Stock Categories did Well During The Great Depression
Now that we have 10 million people unemployed, we may head into another great depression. And another housing crises because I don't think banks can hide their foreclosure books & manipulate the supply of houses like they did in 2008. What stock categories did well during The Great Depression:
- Defense stocks rose 55,000%
- Packaging rose 37,199%
- Coal rose 30,503%
- Hydroelectric Power rose 30,501%
- Auto Parts rose 26,221%
- Watches rose 24,146%
- Radios and TV's rose 24,145%
- Paper rose 21,403%
- S&P rose 1,543%
Source: Fool.com's The Top 10 Depression Stocks
Defense Stocks Are Half Off During the Pandemic
What defense stocks can you pick up right now at half price? Boeing Co. (NYSE: BA) usually trade between $300 and $400 per share is trading at $149. View the latest stock price
Lockheed Martin (NYSE: LMT) usually trades in between $400 and $450 per share is trading at $370. LMT bounced back after landing a $400 million dollar Navy contract for airborne radars.
Packaging Stocks Are Discounted During the Pandemic
Crown Holdings, Inc. (NYSE: CCK) engages in the design, manufacture, and sale of packaging products and equipment for consumer goods. Its products include Beverage Cans and Glass Bottles, Food Cans and Closures, Transit Packaging and Aerosol Cans. The beverage segment manufactures aluminum beverage cans and ends, glass bottles, steel crowns and aluminum caps. Look for it to rise from today's $59 to $80 over the next 11 months.
Silgan Holdings (NASDAQ: SLGN). This company is trading near it's high right now at $30 per share. They have three segments. The metal containers segment includes steel and aluminium containers for human and pet food. The closures segment comprises of metal, composite, and plastic closures for food and beverage products. The plastic containers segment covers custom designed plastic containers and closures for personal care, food, health care, pharmaceutical, household and industrial chemical, pet care, agricultural, automotive, and marine chemical products.
Energy Stocks that Are Probably Recession-Proof
Now, we look for today's equivalent of coal & hydroelectric power stocks that did so well during The Great Depression. Water utilities are monopolies with no competition in their service territories, and most of them pay a very safe dividend. Here are my two recommendations based on the 2008 stock market crash.
American Water Works Company, Inc. (NYSE: AWK) is the largest water and wastewater utility company. They have a presence in 46 states & pay a safe dividend of 1.7%. During this time, they are spending $14,000,000 to upgrade water lines. They usually trade in the $130 to $140 range, but you can pick it up for around $122 right now.
NextEra Energy Inc. (NYSE: NEE) has three huge markets in one company. They develop and sell renewable energy systems. They provide electricity to companies and consumers and transports natural gas. This one is tricky because buildings are empty, and politicians may argue that utilities need to be decreased during this pandemic. They did very well after the stock market crash of 2008 rising from $50 to $280. You can pick up the stock right now at $237. Related Post: What stocks do you well under President Biden
Blue Chips Stocks that Are Usually Safe at Anytime as of April 2020…
- Starbucks (NASDAQ: SBUX) – Trading at a 23% discount at $70
- Nike (NYSE: NKE) – Trading at a 14% discount at $86
- Disney (NYSE: DIS) – Trading at a 28% discount at $104
- Johnson & Johnson (NYSE: JNJ) – Trading at a 7% discount at $141
- Pepsi (NASDAQ: PEP) – Trading at a 8% discount at $134
- Amazon (NASDAQ: AMZN) – Long Term Hold – $1,906
- Facebook (NASDAQ: FB) – Trading at a 22% discount at $171
- IBM (NYSE: IBM) – Trading at a 24% discount at $118
- Berkshire Hathaway (NYSE: BRK.A) – Trading at a 16% discount at $286,120
- Apple (NASDAQ: AAPL) – Trading at a 16% discount at $266
How Are These Stocks Doing in November of 2020
- Starbucks (NASDAQ: SBUX) – $93.59
- Nike (NYSE: NKE) – $126.54
- Disney (NYSE: DIS) – $135.93
- Johnson & Johnson (NYSE: JNJ) – $147.75
- Pepsi (NASDAQ: PEP) – $143.44
- Amazon (NASDAQ: AMZN) – $3,105.37
- Facebook (NASDAQ: FB) – $277
- IBM (NYSE: IBM) – $114.24
- Berkshire Hathaway (NYSE: BRK.A) – $336,302.50
- Apple (NASDAQ: AAPL) – $119 after splitting 1:4
As you can see six months later, we profited 9 out of 10 calls here. These are our stock opinions not advice. Please consult with your financial advisor and do your own due diligence.
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