Recent assessments of economic growth across various global economies fail to inspire optimism. In the eurozone, a delicate balancing act between growth and recession is evident, highlighted by the latest figures of 0.1% year-on-year and -0.1% quarter-on-quarter.
The situation is more dire in Japan, where October results significantly undershot forecasts (-2.1% year-on-year against an anticipated -0.6%), signaling a potential entry into a prolonged recession.
Among developed economies, the U.S. appears relatively strong with a 4.9% quarter-on-quarter growth rate (annualized). However, according to forecasts from the Atlanta Fed, there is a potential drop to 1.5% in the last quarter, raising the probability of a sustained recession in the upcoming quarters.
In light of these conditions, the question arises: How can one effectively structure an investment portfolio that is resilient during recessions?
As the practice of the last two decades shows, recessions in the economy are accompanied by declines in stock markets, this was the case in 2020, 2008, and 2001. However, the crises were quickly averted primarily through decisive action by central banks, which resorted to a loose monetary policy.
In addition to core assets like gold or bonds, it is worth considering choosing stocks that are defensive. Such securities should be sought primarily among sectors such as basic consumer goods, utilities, or health care. This is due to the fact that these sectors are indispensable in the daily life of common people.
From a fundamental point of view, one should pay attention to indicators such as cash flow, debt-to-equity ratio (especially when interest rates are high), or return on invested capital, among others. Using theRead more on investing.com