Can investors insulate themselves during recession?

Team Veye | 30-Mar-2020 investors

The economy is falling rapidly into a recession due to the expanding COVID-19 crisis and the investors worldwide are hunting for recession-resistant sectors and industries.

What happens when the world is having a double whammy? Global market slowdown along with a global pandemic, though may be linked, is rare. Should the investors go for value buying across all sectors even at such times?

The thing one has to ponder over is that when people are selling their stocks and liquidating their portfolios who are buying these. Many smart investors who bought during such times carefully had significant returns on their investments.

In our earlier article, we had asked whether a smart investor can survive the crises. Is identifying companies having growth potential and investing in such companies enough?

It requires no brainer to identify sectors or companies which are countercyclical. Such sectors perform well during the recession and normally have price appreciation despite the prevailing economic headwinds.

Among the sectors and among industries, there are some which are very susceptible to economic changes while others perform regardless of what is happening to the economy. Observing the phases of a business cycle are considered very helpful.

Well-managed companies that have low debt, good cash flow, and strong balance sheets often do comparatively better during such times.

Although no company remains isolated at such times, people need and buy certain items on a recurring basis. Healthcare, utilities and consumer goods sectors are the places where people spend money irrespective of the state of the economy. And when the cash flow is weak people don’t go buying furniture and clothes, they instead defer it. Keeping such things in mind rather than timing the market has always proved to be prudent.


Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website, and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.

veye logo

Grab Your Free Report On 5 ASX Dividend Stocks To Buy In 2024