Already on ArticleSlash?

Forgot your password? Sign Up

How to Remain Immune From Economic Downturn


Visitors: 226

We are passing through a difficult economic phase. The perception for overall economic growth and financial wellbeing is highly negative. The returns on Standard and Poor's index 500 are believed to be the worst since 1991. Many investors are staying on the sidelines now with cash.

Since most of the people are worried about the looming difficult times ahead, there are many safe strategies that investors can pursue in order to protect their investments.

Non-Cyclical Stocks

These provide an excellent defense against economic hardships. Most important in this category are food, grocery, energy and health stocks. These are the things of primary necessity. People will have to buy them in any economic condition. The demand for their products is bound to remain strong. So investing in these types of stocks will provide an excellent safety net. A good portion of one's portfolio should always remain invested in these non-cyclical companies.

Not only that these stocks constitute a good defense against economic recessions, they are also a long term hedge against inflation. Many of them can actually even record growth in bad times. During normal times these are believed to record a double digit growth.

Insurance Sector

Like basic necessities of life, people will always need insurance. Life and property insurance remain in demand even in worst conditions. Not only that they weather slowing business, they also provide large payouts. Stability in their prices has always rendered them quite popular amongst the investing public.

Banks are also a good defense against recessions. These are not likely to fall as much as the overall market. In fact ones amongst them which do not have too much exposure to risky lending will do better. Investors need to watch out for them.

Investing in Energy And Health

Energy and health sectors will always remain the favorites. The most important in this category are obviously the oil and pipeline companies. One can always find underdogs in them with high potential. With oil prices expected to remain above $85 now, energy stocks will continue to perform well.

Another emerging area within the energy sector is the non-renewable energy. However, one has to be careful here. The main difficulty with this group is that many of them are still non-economical. With higher energy prices, they can come into the limelight. Some efficient of them can provide excellent returns in the times to come. Watch for companies developing wind energy.

Positioning For Long Term And Short Term

A balanced portfolio should consist of both long and short term investments. While cyclical stocks can be short term investments, many times non-cyclical will be good for the long term.

Other Resource Companies

In addition to grains and natural gas, other resources can be gold, silver and other mining stocks.

Global Diversification

Diversify globally. The world is no longer dependent too much on any particular country like the US. One should have a good mix of countries for the purposes of investment. If one has a good balanced portfolio, under-performing countries can be compensated by over-performing ones.


One should always do a cost benefit analysis. You can also consider preserving cash for taking advantage of cheap investments in falling markets. But one should not hold to cash for a long time.

The author has background in business, economics and finance. He is presently researching in finding ways to make money and working on the following website and blogs:


Article Source:

Rate this Article: 
Litigation Solicitors might Weather the Economic Downturn
Rated 4 / 5
based on 5 votes

Related Articles:

How To Get A Loan In An Economic Downturn

by: Bill Stone (May 21, 2008) 

No Riding Out Economic Downturn

by: Philip Harris (June 27, 2008) 

Dealing With a Layoff in an Economic Downturn

by: Maurisa Westbury (July 01, 2008) 
(Business/Careers Employment)

The Time to Buy Wholesale is Now During This Economic Downturn

by: Joel D Mclaughlin (September 16, 2008) 
(Shopping and Product Reviews)

Christmas Gifts in This Economic Downturn

by: Zsuaro Bot (October 18, 2008) 
(Shopping and Product Reviews/Gifts)

Economic Downturn equals Rise in Green IT

by: Adam R. Singleton (July 20, 2009) 
(Computers and Technology)

Recession? Depression? Deflation? The ABC's of the Economic Downturn

by: Ki Gray (November 24, 2008) 

Despite the economic downturn, Buyetechs can achieve sales up

by: B. B. (January 19, 2010) 

What Economic Downturn? Haute Couture Flourishes

by: John M Pawlak (June 30, 2008) 
(Shopping and Product Reviews/Fashion Style)

Litigation Solicitors might Weather the Economic Downturn

by: Adam R. Singleton (March 30, 2009)