What are good sectors to invest in during a recession?

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recession
Chris asked:


The economy may be heading into a recession, and I was wondering what sectors would safe plays? Should I invest in CD’s and Bonds? I think Energy has made a great run, but will it go higher? Looking for some advice and help. Thanks in advance.

Kristin
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    • This entry was posted on Saturday, March 21st, 2009 at 9:47 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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    No Responses to “What are good sectors to invest in during a recession?”

    1. Cerebal Says:
      March 24th, 2009 at 6:38 am

      Are you talking a US recession or a broader one?

    2. Charles Dexter Ward Says:
      March 25th, 2009 at 10:26 am

      Alcohol. Stays up even during a recession.

    3. Rick G Says:
      March 26th, 2009 at 12:54 pm

      I just asked this yesterday

    4. muncie birder Says:
      March 26th, 2009 at 7:41 pm

      During a recession your two options are t-bills and long government bonds. The second has some risk, especially if we were to have stagflation as during the 80s when interest rates went to 14% to 16%. Maybe you should stick with t-bills.

    5. Aaron F. Says:
      March 28th, 2009 at 10:16 pm

      Generally, when the stock market is down, U.S. government and safe municipal bonds, CDs, and money market funds outperform the market. This is because government bonds, CDs, and money market funds offer a low, but constant, rate of return, so they underperform the market when stocks are up, but outperform it when stocks are down.

    6. Random Guy from Texas Says:
      March 29th, 2009 at 1:08 am

      Energy demand growth is linked to economic growth, so energy would probably not be a good sector.

      Lower your risk profile overall by picking safer things to invest in such as US treasuries and so forth.

      Commonly held wisdom is to invest in things that do well in recessions, such as discount retailers (people go there as opposed to more expensive shops), health care (when you are sick, it doesn’t matter what the economy is doing), etc.

      But keep in mind the market knows this too, so your there is little opportunity there for a lot of money.

    7. perdidobums Says:
      March 29th, 2009 at 10:41 am

      Defensive stock sectors like utilities and consumer staples usually hold up well in a recession. Bonds may also do well if this is a typical recession.