Amazon Founder and Executive Chairman Jeff Bezos is sounding the alarm.
In an interview with CNN, Bezos said the economy “isn’t doing well right now.”
“Things are slowing down. You see layoffs in many sectors of the economy.
And that means you might want to tighten your budget.
“If you’re an individual looking to buy a big screen TV, you might want to wait, save your money and see what happens,” the billionaire recommends. “The same is true with a new automobile, a refrigerator or anything else. Just remove some risk from the equation.
This is not a good sign for investors.
But not all businesses are created equal. Some – like the three listed below – might be able to perform well even if the economy falls into recession.
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Utilities
The utilities sector consists of companies that provide electricity, water, natural gas and other essential services to homes and businesses.
The industry isn’t glamorous, but it’s recession-proof: no matter what happens to the economy, people will still need to heat their homes in the winter and turn on the lights at night.
High barriers to entry protect the profits of existing utility companies. Building the infrastructure needed to supply gas, water or electricity is quite expensive and the industry is heavily regulated by the government.
Thanks to the recurring nature of business, the sector is also known to pay reliable dividends.
If you’re looking for the best utility stocks, the names of the Utilities Select Sector SPDR Fund (XLU) are a good starting point for further research.
Health care
Healthcare is a classic example of a defensive sector due to its lack of correlation with the ups and downs of the economy.
At the same time, the sector offers great potential for long-term growth due to favorable demographic factors – in particular an aging population – and numerous innovations.
Average investors may find it difficult to pick specific stocks in the healthcare sector. But healthcare ETFs can provide both a diverse and profitable way to gain exposure to the space.
Read more: Trade while the market is down: Here are the best investing apps to take advantage of “once in a generation” opportunities (even if you’re a beginner)
Vanguard Health Care ETF (VHT) offers investors broad exposure to the healthcare sector.
To tap into specific segments of the healthcare industry, investors can look to names like iShares Biotechnology ETF (IBB) and iShares US Medical Devices ETF (IHI).
Immovable
It may seem counter-intuitive to have real estate on this list.
While it’s true that mortgage rates have risen, real estate has actually demonstrated its resilience in times of rising interest rates, according to investment management firm Invesco.
“Between 1978 and 2021, there were 10 distinct years when the federal funds rate rose,” says Invesco. “During these identified 10 years, US private real estate has outperformed stocks and bonds seven times and US public real estate has outperformed six times.”
Well-chosen properties can provide more than just price appreciation. Investors also get to earn a steady stream of rental income.
But you don’t have to be a homeowner to start investing in real estate. There are many real estate investment trusts (REITs) as well as crowdfunding platforms that can help you become a real estate tycoon.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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