Here are the top recession-proof sectors that tend to thrive during economic downturns.
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00:00any given year, there's always a chance for a recession. Let's call it 10% in any given year.
00:05Typically, it's from something that's exogenous that comes in, disrupts the economy, or a major
00:11change in fiscal and monetary policy that can disrupt economic activity. I would say that
00:16percentage is probably closer to 25%. So it's certainly not a prediction that we're going to
00:20have a recession. But the chances of a recession certainly are higher, especially if the uncertainty
00:25about new policy drags on throughout the summer and we head into the fall, we still haven't landed
00:31on a place where the administration is happy with where they are on trade policy. And if they drag
00:37their feet that long, they don't pass a bill to get corporate taxes made permanent. And we haven't
00:43really heard about any big regulatory changes. We could certainly see this economy going to
00:48into a recession, but that's certainly not our base case right now. If you contemplating a
00:51recession coming up, it's certainly wise to look at your asset allocation. And if you're a typical,
00:56you know, call it 60-40 or 80-20, where you have 80% of your equities, your assets and equities
01:02and 20% in fixed income, you may want to look at that equity allocation and say, is it defensive or
01:08is it aggressively speculative? Meaning, am I overweight technology versus things that can
01:12actually be a little more recession-proof like healthcare? And if that's the choice that you need
01:17to make, I would say that, you know, you should be rebalancing on a regular basis anyway. But the
01:22best thing to do is perhaps raise a little bit of cash. So you can be, you know, call it 60%
01:28equities and 40, 35% fixed income and have 5% cash allocation for some of those opportunities
01:34that come along as that recession recedes. But again, recession is not our base case, but it's
01:39always important to look at your portfolio and make sure your asset allocation is something
01:44that helps you sleep at night. So if you're way overexposed and this market volatility has
01:49been making you crazy, you're probably over allocated equities. You might want to go from
01:5380% down to 60%, depending on your investment time horizon. The things that will look best
01:58in a recession and uncertain times, oddly enough, are the things that we need versus the things that
02:02we want, right? That's why healthcare is doing so well right now. We're always going to need
02:06healthcare. We always want a new TV or a new iPhone, but we always need healthcare. The same
02:11thing is true with utilities. We need that in our daily life. I would argue that the Apple phone
02:17or your iPhone has become a utility, but certainly the things you need fall into that category of
02:22things like healthcare, things like utilities, consumer staples. And oddly enough, those are
02:28three of the best performing sectors in the S&P 500 so far in a year to date basis.