During the 2008 financial crash, the best-performing investments were generally safe-haven assets, specifically U.S. Treasury bonds, gold, and cash equivalents. Defensive stocks in sectors like consumer staples (Walmart, Dollar Tree) and health care also outperformed, as did discount retailers, while long-term bonds provided significant stability compared to the crashing equity markets.
Contrary to investor expectations, several growth stocks including Apple Inc. (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), and Netflix Inc. (NASDAQ:NFLX) grew during the 2008 recession, so investors don't have to ignore growth stocks to be conservative.
Government bonds tend to be effective SHs during downturns triggered by macroeconomic or financial market events, as these downturns are typically associated with lower inflation and interest rates.
While not entirely "recession-proof" investments, three stocks were able to outperform the S&P 500 during the last big recession in the U.S. They were Walmart (WMT +0.42%), McDonald's (MCD 0.39%), and Amazon (AMZN +0.49%).
He also initiated a few new positions during the Great Recession. In the second quarter of 2008, Buffett bought shares of NRG Energy. The next quarter, he opened stakes in ConocoPhillips and Eaton.
Healthcare, utilities staples, and consumer stocks typically perform best during economic weakness. At the negative side of the ledger would be consumer discretionary stocks, industrial companies, and basic materials, and certain parts of the technology sector that do not perform well.
Defensive sectors like utilities and consumer staples often hold up better during downturns. Cash options like money markets or CDs offer stability but lower yields.
So if you're wondering where your money actually belongs when the economy slows, here's where to focus -- and why.
The 3-5-7 rule in stock trading is a risk management strategy: risk no more than 3% of capital on a single trade, keep total open position risk under 5%, and aim for a minimum 7% profit target or 7:1 reward-to-risk ratio, ensuring capital preservation and disciplined growth by setting clear limits and avoiding emotional decisions.
Millionaires are made during recessions because fear causes asset prices (stocks, real estate) to drop, creating "fire sale" buying opportunities for those with cash and financial knowledge, while innovative entrepreneurs launch businesses that solve new problems, leading to fortunes built on discounted assets and emerging trends, like Uber and Airbnb after 2008. Recessions clear out weaker businesses, allowing stronger, adaptable companies and investors to grow as the economy eventually recovers and prices rebound.
To avoid that, we will offer just ten more important pieces of survival gear that may become handy during an economic depression:
So if you invested in Apple a decade ago, you'd probably be feeling pretty good about it today. According to CNBC calculations, a $1,000 investment made in early August 2008 would be worth more than $9,222.50 as of August 2, 2018, or over nine times as much, including price appreciation and excluding dividends.
Despite extreme volatility, Bitcoin's price has skyrocketed 1,060% in the past five years as I write this. This monster gain would've turned a $10,000 initial capital outlay in October 2020 to a whopping $115,700 on Oct. 6.
The "27.39 rule" (often rounded to $27.40) is a simple financial strategy to save $10,000 in one year by consistently setting aside $27.40 every single day, making it an achievable micro-saving habit to build wealth or an emergency fund. It turns the daunting goal of saving $10,000 into a manageable daily action, emphasizing consistency over large lump sums.
If Warren Buffett had $10,000 today, he'd focus on finding overlooked, high-quality small companies (small-caps) at attractive prices, buying them as businesses, not just stock tickers, and letting compound interest work over a long period by starting early and reinvesting dividends, much like he did in his early days, emphasizing fundamental value over market hype.
To make $3,000 a month ($36,000/year) from investments, you need a significant lump sum or consistent, high-yield income streams, with estimates ranging from roughly $300,000 at a 12% yield to over $700,000 for stable Dividend Aristocrats, depending on your investment type, dividend yield, risk tolerance, and strategy. A simple formula is: Investment Needed = ($3,000 x 12) / Annual Dividend Yield.
Consumer staples
Quick Answer. During a recession, consider putting your money in a high-yield savings account, CD, money market account or bonds. A recession is usually defined as at least two consecutive quarters of negative gross domestic product (GDP) growth.