What You Want to Own in a Recession

What You Want to Own in a Recession

The Federal Reserve recently cut interest rates for the first time in years. And if you've been following our advice, you owned the right stocks...

Longtime readers know that I like boring, high-quality stocks... And when I think of these types of stocks, I often go to "low beta" stocks.

In stock market parlance, beta measures the correlation of an individual stock to the market as a whole. A beta of 1.0 means the stock's price moves in tandem with the market: If the market is up 5%, the stock is up 5%.

A beta of more than 1.0 means the stock's price is more volatile than the market (with more pronounced rises and falls). And a beta of less than 1.0 means the stock's price is less volatile than the market.

Here's what happens to stocks after a Fed's rate cut...

As you can see, after a rate cut, you typically want to avoid small-cap stocks. Smaller businesses are the ones that suffer the most if economic growth stalls.

Large-cap stocks don't do much better, either.

The stocks you want to own following a rate cut are "low beta" and "high quality" stocks.

These are also the stocks you'd want to own in a recession. You see, a rate cut typically happens to try to prevent a recession. And it's very possible that we could see a recession in the next 12 months. And if we do, holding low-beta and high-quality stocks protect your portfolio in times of economic turmoil.

Our friend Marc Chaikin is also seeing the warning signs...

After dozens of record highs in the S&P 500 Index this year – and some serious shake-ups – lots of folks are acting foolishly with their money... Either they're still recklessly investing in AI stocks or they're hiding out in Treasury bills.

According to Marc, today's historic market is causing a massive rotation of capital among the so-called "smart money"... giving readers a rare opportunity to capitalize on a rapid-fire, short-term strategy that will be critical to making the biggest potential profits over the next 12 months and avoiding the biggest losses.

Click here for the full details.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
November 2, 2024

Reader question of the week...

Q: I have been reading your health bulletin for years now and appreciate the contents.

My cholesterol seems to only go up no matter how healthy we eat or how much I exercise. What food or juice (pomegranate/bergamot) is available that can help me control LDL [low-density lipoprotein] and triglycerides before taking statins? Cheers. – H.D.

A: Thanks for your longtime readership, H.D. Cholesterol – and the role your diet plays – is a complex situation. We've written a lot over the years about ways to lower your cholesterol without the use of statins. Below are some of our most useful issues...

The Cholesterol Myth
Enjoy Your Eggs
The Heavy Cost of Lipitor
The Lifestyle Change Most of You Must Make Today
Two Lifestyle Tips to Lower Your Cholesterol

For folks who have extremely high levels of cholesterol despite doing everything right, or who have a parent or grandparent who died early from a heart attack (at 50 years old, for instance), you should have your cholesterol checked. You could have familial hypercholesterolemia, a genetically linked high-cholesterol disorder, which is dangerous.

Normal levels of cholesterol run from about 180 to 220. Familial hypercholesterolemia is suspected when your cholesterol hits 350 or more. In that case... it's time to get your doctor's help.

Keep sending your questions, comments, and suggestions our way. We read every e-mail... [email protected].