How to invest in next recession

This is why companies that are perceived to be inexpensive can outperform. As we’ve warned over the years, you are your own worst enemy. As a result, equity markets tend to do very well during economic recoveries. Prepared investors can benefit from that. So, what’s the game plan to not just survive, but thrive, during a recession?

The three-legged stool is a classic approach to retirement. And Sophie Huynh, a cross asset strategist at Societe Generale, says a different three-legged stool can help investors prepare for a rough stretch in the stock market. Huynh expects the Hoe economy to go into a recession in the second quarter ofleading to a downturn for stocks. How to invest in next recession her prediction also calls for a relatively mild recession. And just as important, she said there are powerful trends that limit how badly US stocks are going to get hurt.

These three things can help prepare you for the challenges — and opportunities — that come with a market downturn.

From the Great Depression to the Great Recession, economic disasters have become embedded in our cultural subconscious like a recurring nightmare… But must we always live with the threat of waking up in a cold sweat? Not only do we spend too much money on frivolous, instant-gratification purchases that prevent us from saving for retirement, but apparently we also have no idea how to play the market. The average investor has earned total returns of just 2. Needless to say, these days no one is asking me about investing in bitcoin. Finally, progress. As we age, our financial decision-making capabilities tend to evolve along with our priorities. Honestly, who cares?

Recessions are inevitable, but you can still outperform when they strike

The three-legged stool is a classic approach to retirement. And Sophie Huynh, a cross asset strategist at Societe Generale, says a different three-legged stool can help investors prepare for a rough stretch in the stock market. Huynh expects the US economy to go into a recession in the second quarter ofleading to a downturn for stocks. But her prediction also calls for a relatively mild recession. And just as important, she said there are powerful trends that limit how badly US stocks are going to get hurt.

Even if the Federal Reserve can’t prevent a recession, its interest rate cuts will be a key source of support for the market, Huynh says. She thinks the high dividends of US companies will help as netx. And while a recession always hurts corporate earnings growth — which has historically been the biggest driver of stock prices — Huynh says this would be imvest mild recession after a period of already-slow growth.

That means earnings forecasts won’t fall as much as they usually do when a recession hits, and that means stocks won’t be punished as badly. With that in mind, she’s offering three trades to help investors thrive during the downturn.

Yes, Huynh says US stocks still make more sense than equities in recsssion areas even with a recession looming. Falling interest rates are a huge advantage, she writes, as US equities tend to beat all of their international competitors when rates start to go.

She backs that up with this chart that shows US stock breaking away from their peers and staying on top for more than a year after the rate-cutting cycle begins. Sophie Redession of Societe Generale says the effects of interest rate cuts by the Federal Reserve will give US stocks an edge that lasts for months.

If that weren’t enough, how to invest in next recession adds that US stocks now offer much better yields than Rrcession bonds, which has the important effect nnext limiting how to invest in next recession downside for those stocks by supporting their valuations. Huynh is telling investors to short the Nasdaq in favor of emerging markets stocks, as three major developments make big tech look less appealing than it has for most of the past decade.

She points to growing regulatory scrutiny of tech companiesnew tax rules that could hamper their profitability, and pressure on their earnings growth as reasons for caution around technology companies. Read more : As nervous investors flood into trades designed to minimize volatility, Goldman says they’re confusing steady prices with real stability — and could be courting disaster. Search icon A magnifying glass. It indicates, «Click to perform a search». Close icon Two crossed lines that form an ‘X’.

It indicates a way to close an interaction, or dismiss a notification. Marley Jay. This story requires our BI Prime membership. Sophie Huynh, a cross asset strategist at Societe Generale, says the US has less than a year to go before a recession hits and a bear market in US stocks sets in.

Still, Huynh says investors should understand there are limits to how bad things are going to get for US stocks in particular. She’s recommending three trades ahead of that downturn. Two of them are built around the market’s big winners continuing to outperform.

But for a third, she’s saying it’s time to pull the ripcord. Click here for more BI Prime stories.

Brands that neglected marketing, on the other hand, saw their sales drop steeply. Following this theory, a portfolio containing a variety of assets poses less risk and ultimately yields higher returns tk one holding just a. It simply means that you have to be smart about where you’re putting your money to work. Tools for Fundamental Analysis. Image source: Getty Images. Equity investing involves owning high-quality companies with long histories recesslon these companies tend to hold up better in recessions. At a price of approximately 15 times next year’s earnings per share, Philip Morris might not appear cheap initially.