Buying In A Recession


Thinks s/he gets paid by the post
Jul 24, 2003
Pasadena CA
Well there was a thread on the possibility of a recession in 2008, I tend to think there will be one. As I have built up my cash assets a bit, or more accurately stopped buying both stocks and bonds, I wonder what would be the thing to buy if/when a recession hits? Hotels & leisure activities? Any good ETFs to buy in midrecession to hold for a few years? I am not trying to time the bottom or the exit time but I expect we will at least know when we are in a recession and there should be some things for sale at the time. I am not really familiar with recessions (I have lived through a number of them but not invested through the cycle) and figure something should be a bargain.
You'll know it when you see it.

For non-financial assets, it could be a good time to replace cars and purchase durable goods. Many times the going gets tough for companies during a recession and they look to cutting prices as a way to move inventory and (hopefully) squeak by.
Cyclicals are usualy the best buys, since people become convinced they will not make it to the next cycle and sell. If you bought airlines, basic materials producers, energy, boring manufacturers, etc., you would have made a mint in the last recession, especially if you bought teh ones that were leveraged enough to scare people but not enough to actually go bust. A more conservative play was t o buy the heavily scuffed up bonds of these companies, but you still made fat returns if you bought at the right price.

Have to watch and see what gets killed and then act accordingly.
"Defensive" stocks good for recession:

Consumer Staples: Food, drugs, cosmetics, liquor, tobacco
Utilities: Gas, electric water
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