5 Useful Investment Strategies During a Recession

The COVID-19 pandemic sent shockwaves through the global stock market. Many investors, experienced and new, scrambled to cut their losses and exit the market. By March, the S&P 500 had shaved more than 30 percent off its value. While this isn’t surprising, the savviest investors know that uncertainty can often moonlight as opportunity with the right investment strategies.

U-shaped, V-shaped or temporarily L-shaped; one thing’s for certain, turbulent times don’t last forever. That’s why, when a recession rolls around, I’m a dyed-in-the-wool believer in using all the investment skills at my disposal to take advantage of economic downturns and make long-term trades and investments. There are some seriously big returns to be made if you know where to look.  

Want to learn my top trading strategies for a recession? Register for my free Trade the Turmoil market training. Start protecting your portfolio and learn how to take advantage of this unique opportunity. You can also read on for five tips for trading during a recession, including what to consider investing in.

Investment Strategies

Investment Strategy #1: High demand, core sector stocks

While it can be tempting to steer clear of equities during a recession, they can still offer incredible value. As most of the economy navigates its way through the turbulence, a handful of sectors tend to thrive. These can potentially deliver strong gains.

In the face of the COVID-19 pandemic, industries such as healthcare, pharmaceuticals and grocery stores are experiencing an unprecedented boom. Regardless of the state of the economy, people still need these items. This makes core sector stocks a clever trading strategy during a recession. In fact, technology stocks like Apple, Google, Microsoft and Amazon have all thrived during the COVID-19 pandemic and will be winners long after it has passed.

Investment Strategy #2: Quality, not quantity

Decades of experience have taught me that a ‘quality over quantity’ approach to trading is one of the best investment strategies around. Investing and trading in high quality, top performing companies with minimal debt, strong balance sheets and healthy cash flows is a reliable way to unlock ROI.

Recessions mean shares in these sorts of companies inevitably fall. This can open doors for investors who know what to look for. Once the economy begins to recover, you’re in a good position to start earning.

Laptop open with Microsoft Windows on the screen

Investment Strategy #3: Reliable dividend stocks

Dividend stocks are great if you’re looking for reliable passive income that holds its long-term value. Again, sound balance sheets and small debt-to-equity (D/E) ratios are good prerequisites to identify. If you’re looking for a lower risk investment, consider Dividend Aristocrats. These are top performing S&P 500 index companies with a 25-year or more track record of increasing dividend payouts.

Investment Strategy #4: Real estate

Economists are predicting the Australian real estate market could crash by up to 30 percent in a worst case scenario. While this could prove disastrous for some, it could usher in a unique opportunity for investors.

The price reduction may take a few quarters to kick in. That’s why now is a good time to consider plotting your next move. This means saving for a deposit, seeking mortgage approval and reading up on areas with high ROI. When house prices drop, you’ll be ready to pounce.

For Sale Real Estate Sign in Front of Beautiful New Home.

Investment Strategy #5: Invest in your knowledge and skills

This lull in work and social life triggered by the COVID-19 pandemic is a great opportunity to invest in yourself. I’ve always believed knowledge is power. The savvier you get, the probability is you will make better trading and investing decisions.  

Even without a recession, one of the best investment strategies is to invest in building your skillset. That’s why I’ve developed empowering courses like Trade the Turmoil. It’s a market crisis workshop designed to help you protect your portfolio, safeguard your assets and take advantage of a potential once-in-a-lifetime recession opportunity.