What goes up when the stock market crashes?
What goes up if the stock market crashes? There is nothing that will definitely go up if the stock market crashes. Interest bearing investments such as money market funds will continue to earn interest. Bonds may hold their value or increase, and individual bonds including Treasury's will continue to earn interest.
The best recession stocks include consumer staples, utilities and healthcare companies, all of which produce goods and services that consumers can't do without, no matter how bad the economy gets. Forbes Advisor has identified nine of the best recession stocks for your investment portfolio right now.
Sometimes, however, the economy turns or an asset bubble pops—in which case, markets crash. Investors who experience a crash can lose money if they sell their positions, instead of waiting it out for a rise. Those who have purchased stock on margin may be forced to liquidate at a loss due to margin calls.
Another way to make money on a crisis is to bet that one will happen. Short-selling stocks or short equity index futures is one way to profit from a bear market. A short seller borrows shares they don't already own to sell them and, hopefully, repurchase them at a lower price.
An inverse ETF is set up so that its price rises (or falls) when the price of its target asset falls (or rises). This means the ETF performs inversely to the asset it's tracking. For example, an inverse ETF may be based on the S&P 500 index. The ETF is designed to rise as the index falls in value.
Items To Barter With
Many investors will find value in having items that can be used as a means of barter. Such investments might include food, water, and fuel. While it's unlikely that we'll ever end up using a bartering system like in the olden days, it's still a good idea to have some items on hand, just in case.
Due to its reputation for being a safe-haven asset, gold tends to perform well during a recession. For example, when the stock market collapsed in 2007, investment demand for gold spiked and continued to rise, and gold doubled in value between 2007 and 2011.
Stock | Implied upside from Feb. 21 close |
---|---|
Accenture PLC (ACN) | 3.6% |
T-Mobile US Inc. (TMUS) | 12.8% |
Walt Disney Co. (DIS) | 11.5% |
Netflix Inc. (NFLX) | 6.4% |
By continuing to buy shares when the market is down, you may lower the overall price you pay per share and position yourself for growth when stocks inevitably recover. But remember: This recovery isn't instant. It may take months or even years.
Where to put money during a recession. Putting money in savings accounts, money market accounts, and CDs keeps your money safe in an FDIC-insured bank account (or NCUA-insured credit union account). Alternatively, invest in the stock market with a broker.
Can I lose my 401k if the market crashes?
The worst thing you can do to your 401(k) is to cash out if the market crashes. Market downturns are generally short and minimal compared to the rebounds that follow. As long as you hold on to your investments during a bear market, you haven't lost anything.
In the mid-2000s, Burry was famous for placing a wager against the housing market and profited handsomely from the subprime lending crisis and the collapse of numerous major financial entities in 2008.
Cash: Offers liquidity, allowing you to cover expenses or seize investment opportunities. Property: Can provide rental income and potential long-term appreciation, but selling might be difficult during an economic downturn.
In short, the 3-day rule dictates that following a substantial drop in a stock's share price — typically high single digits or more in terms of percent change — investors should wait 3 days to buy.
Investors looking to weather a recession can use exchange-traded funds (ETFs) as one way to reduce risk through diversification. ETFs that specialize in consumer staples and non-cyclicals outperformed the broader market during the Great Recession and are likely to persevere in future downturns.
Buy dividend stocks
Another way to hedge against bear markets is to invest in stocks that pay dividends over those that do not. Dividend-paying stocks usually outperform non-dividend-paying stocks — typically with less risk, according to 2022 research from Johnson Asset Management.
What to Own When the Dollar Collapses. Historically, tangible assets like gold and real estate have been sought after as they tend to retain intrinsic value. Investing in commodities such as precious metals, oil, and agricultural products is also considered a smart choice.
We expect 2024 to be a year of diverging trends for the dollar. It will likely move lower on a broad trade-weighted basis early in the year but stabilize as the year progresses. Although we expect a general downward drift for the dollar, performance of individual currencies will likely vary widely.
For investors, “cash is king during a recession” sums up the advantages of keeping liquid assets on hand when the economy turns south. From weathering rough markets to going all-in on discounted investments, investors can leverage cash to improve their financial positions.
Precious metals, like gold or silver, tend to perform well during market slowdowns. But since the demand for these kinds of commodities often increases during recessions, their prices usually go up too.
Do gold and silver go up during a recession?
In 2008/2009 recession, for example, gold prices rose sharply due to concerns about hyperinflation caused by central banks printing too much money. Silver prices were relatively stable during this same period. In contrast, during the 2001 recession, silver fluctuated around $3/oz., while gold gained about 7.3%.
Gold is often considered a good investment for diversification, as it may be less correlated with other assets such as stocks or bonds.
For example, it took the stock market just over two years to recover from the 1987 stock market crash. However, it took the market almost six years to recover from the dot-com bubble burst in 2000. For the financial crisis of 2008, it took close to five years for the stock market to bottom out and start recovering.
Walmart outshined its peer Target during the recession as TGT earnings decreased from 2007 to 2008. If the country does enter into a recession in 2024, WMT is the stock you want to own due to its one-stop-shop format & low prices.
It's normal to feel pessimistic after a crash, but if you're investing for the long term, doing nothing is often the best course. It's important to remember that when you sell investments in a downturn, you lock in your losses.
References
- https://finance.yahoo.com/news/invest-100-000-turn-1-124500592.html
- https://www.quora.com/What-do-I-do-after-a-huge-loss-in-stock-trading
- https://finance.yahoo.com/news/3-no-brainer-stocks-buy-173000230.html
- https://www.businessinsider.com/personal-finance/recession-things-not-to-buy-2022-12
- https://www.investopedia.com/articles/investing/052216/4-benefits-holding-stocks-long-term.asp
- https://www.propelx.com/blog/out-with-70-30-and-in-with-60-30-10/
- https://www.bankrate.com/retirement/how-to-protect-401k-from-market-crash/
- https://www.investors.com/how-to-invest/when-to-sell-stocks/
- https://sponsored.bloomberg.com/article/investing-in-gold-is-gold-still-a-good-inflation-hedge-in-a-recession-
- https://stockanalysis.com/markets/losers/week/
- https://money.usnews.com/investing/articles/will-the-stock-market-crash-risk-factors
- https://www.forbes.com/sites/qai/2022/08/24/is-it-true-that-cash-is-king-during-a-recession/
- https://www.usatoday.com/money/blueprint/retirement/protect-your-401k-during-recession/
- https://www.investopedia.com/articles/forex-currencies/091416/what-would-it-take-us-dollar-collapse.asp
- https://www.quora.com/Why-do-90-of-traders-lose-their-money-and-how-can-I-join-the-10-success-traders
- https://www.forbes.com/advisor/investing/best-investments-stock-market-crash/
- https://www.tradebulls.in/trading-account-basics/10-best-rules-successful-trading
- https://finance.yahoo.com/gainers/
- https://www.xtb.com/en/education/risk-reward
- https://www.investopedia.com/financial-edge/0910/the-two-hour-a-day-trading-plan.aspx
- https://www.cnbc.com/2022/09/27/stock-market-losses-wipe-out-9-trillion-from-americans-wealth-.html
- https://www.sofi.com/learn/content/what-happens-if-stock-goes-to-zero/
- https://smartasset.com/investing/5-things-to-invest-in-when-a-recession-hits
- https://www.investopedia.com/articles/investing/041415/investing-crisis-high-riskhigh-reward-strategy.asp
- https://finance.yahoo.com/news/genius-ways-1-000-month-105500970.html
- https://www.bankrate.com/investing/best-inverse-etfs/
- https://www.thestreet.com/dictionary/delisting-delisted
- https://www.creditkarma.com/financial-planning/i/how-to-plan-for-recession
- https://www.usatoday.com/money/blueprint/investing/best-stocks-for-beginners/
- https://www.nerdwallet.com/article/taxes/tax-loss-harvesting
- https://www.nasdaq.com/articles/heres-how-much-cash-you-need-stashed-if-a-recession-happens
- https://greenamerica.org/beginners-guide-buying-stocks
- https://www.mikevestil.com/guides/what-to-own-when-the-dollar-collapses/
- https://www.kompas.id/baca/english/2024/03/06/en-warga-super-kaya-dunia-kurangi-kepemilikan-saham-kecuali-asia
- https://www.nasdaq.com/articles/do-this-for-$4000-in-dividend-income-every-month
- https://blueberrymarkets.com/market-analysis/news/what-is-5-3-1-trading-strategy/
- https://www.marketbeat.com/market-data/biggest-stock-losers-this-month/
- https://www.realized1031.com/blog/what-is-the-3k-capital-loss-rule
- https://www.valueresearchonline.com/stocks-screener/in/seasonal/stocks-5-year-low/
- https://www.livemint.com/market/nse-top-losers
- https://www.fool.com/the-ascent/banks/where-put-money-recession/
- https://www.covenantwealthadvisors.com/post/understanding-stock-market-corrections-and-crashes
- https://www.moneylion.com/learn/can-you-lose-money-in-stocks/
- https://finance.yahoo.com/news/deduct-stock-losses-taxes-201532440.html
- https://www.investopedia.com/terms/g/great-recession.asp
- https://www.investopedia.com/ask/answers/lose-money-stock-market-crashes/
- https://medium.com/@Levente22/shocking-but-true-90-of-people-lose-money-in-stocks-9da95870cbe8
- https://www.tradingview.com/markets/stocks-usa/market-movers-atl/
- https://apnews.com/buyline-personal-finance/article/what-to-do-when-the-stock-market-crashes
- https://seekingalpha.com/article/4640618-walmart-stock-you-want-to-own-enter-recession
- https://www.waldronpartners.com/blog/how-long-does-it-take-for-the-stock-market-to-recover-from-a-crash
- https://www.investopedia.com/ask/answers/what-is-the-rule-72/
- https://www.sofi.com/learn/content/when-to-buy-stocks/
- https://www.thestreet.com/investing/how-many-stocks-and-how-much-of-them-should-you-own
- https://www.experian.com/blogs/ask-experian/where-to-put-savings-in-recession/
- https://finance.yahoo.com/news/10-best-stocks-invest-2024-200401023.html
- https://www.poems.com.sg/glossary/trading-terms/trade-sizing/
- https://www.investopedia.com/financial-edge/0811/9-businesses-that-thrive-in-recession.aspx
- https://www.linkedin.com/pulse/warren-buffett-how-many-stocks-should-you-own-habeeb-mahmood
- https://www.investopedia.com/ask/answers/05/optimalportfoliosize.asp
- https://www.investopedia.com/articles/basics/08/invest-in-gold.asp
- https://www.5paisa.com/share-market-today/52-week-low
- https://www.franklintempleton.com/forms-literature/download/RRET-FLRCV
- https://www.quora.com/When-I-lose-money-in-the-stock-market-where-does-that-money-go-Does-it-just-disappear-into-thin-air-or-does-someone-else-get-it
- https://www.tsinetwork.ca/daily-advice/wealth-management/how-many-stocks-should-i-own/
- https://www.nerdwallet.com/article/investing/what-to-do-when-stock-market-is-crashing
- https://www.nerdwallet.com/article/investing/how-to-invest-in-your-40s
- https://www.quora.com/What-is-the-better-investment-strategy-holding-on-to-a-falling-stock-or-selling-it-and-investing-in-another-one
- https://www.forbes.com/advisor/investing/stock-market-crash/
- https://www.investopedia.com/articles/investing/041615/6-etfs-are-recessionproof.asp
- https://www.schwab.com/retirement-portfolio
- https://www.forbes.com/sites/pattieehsaei/2023/10/12/you-can-afford-to-invest-start-with-just-100-per-month/
- https://www.finra.org/investors/investing/investment-products/stocks/evaluating-stocks
- https://steemit.com/finance/@tradergurl/the-90-90-90-rule
- https://www.usnews.com/news/national-news/articles/2021-03-15/who-owns-stocks-in-america-mostly-its-the-wealthy-and-white
- https://www.investopedia.com/articles/basics/10/3-ways-tell-stock-bottom.asp
- https://www.creditkarma.com/investments/i/bear-market-investing-strategies
- https://www.morningstar.com/portfolios/how-long-will-it-take-market-recover
- https://finance.yahoo.com/news/buy-everyone-selling-203708979.html
- https://www.forbes.com/advisor/investing/best-airline-stocks/
- https://www.investopedia.com/articles/investing/111315/deducting-stock-losses-guide.asp
- https://www.schwab.com/learn/story/where-us-dollar-may-be-headed-2024
- https://www.indmoney.com/stocks/category/52-week-low
- https://www.nasdaq.com/articles/do-prices-go-down-in-a-recession-heres-what-usually-gets-cheaper
- https://www.bankrate.com/investing/how-to-deduct-stock-losses-from-taxes/
- https://www.eightcap.com/labs/how-to-recover-from-a-significant-trading-loss/
- https://ticker.finology.in/market/top-losers
- https://money.usnews.com/investing/articles/best-performing-401-k-funds
- https://www.carlylefinancial.com/blog/if-the-dollar-collapses-what-happens-to-your-house/
- https://www.linkedin.com/pulse/what-does-recession-mean-housing-market-bestrealestatemarket-jsskc
- https://www.investopedia.com/articles/stocks/07/100_equities.asp
- https://smartasset.com/retirement/how-to-protect-your-401k-from-stock-market-crash
- https://www.cnbc.com/2019/08/30/how-to-turn-100-into-1-million-according-to-self-made-millionaires.html
- https://www.investopedia.com/ask/answers/04/052704.asp
- https://www.stockmarketloss.com/everyone-got-burned-dont-believe-it/
- https://themillennialmoneywoman.com/how-to-invest-100-dollars/
- https://money.usnews.com/money/retirement/articles/should-retirees-follow-the-100-minus-your-age-rule-for-stock-allocation
- https://www.quora.com/Is-it-advisable-for-individual-investors-to-own-30-or-more-stocks-in-their-portfolio
- https://money.usnews.com/investing/articles/stocks-that-outperform-in-a-recession
- https://www.linkedin.com/pulse/what-90-rule-forex-broker-forex-global-czp0c
- https://www.usatoday.com/money/blueprint/investing/warren-buffett-berkshire-hathaway-portfolio/
- https://www.fool.com/terms/c/cash-is-king/
- https://smartasset.com/personal-finance/is-my-money-safe-in-the-bank-during-a-depression
- https://www.benzinga.com/money/what-is-the-3-day-rule-in-stock-trading
- https://www.noradarealestate.com/blog/will-housing-be-cheaper-if-the-market-crashes/
- https://www.investopedia.com/articles/stocks/08/industries-thrive-on-recession.asp
- https://time.com/personal-finance/article/how-many-stocks-should-i-own/
- https://www.businessinsider.com/personal-finance/is-money-safe-in-bank-during-recession
- https://www.cnn.com/2023/08/15/investing/michael-burry-stock-market-crash/index.html
- https://www.investopedia.com/articles/basics/03/060603.asp
- https://www.investopedia.com/day-trading/best-time-day-week-month-trade-stocks/
- https://www.forbes.com/advisor/investing/best-recession-stocks/
- https://www.investopedia.com/ask/answers/042115/what-caused-stock-market-crash-1929-preceded-great-depression.asp
- https://www.nerdwallet.com/article/taxes/taxes-on-stocks
- https://www.investopedia.com/articles/investing/062714/100-minus-your-age-outdated.asp
- https://groww.in/blog/how-to-monitor-your-stock-portfolio
- https://money.usnews.com/investing/articles/best-cheap-stocks-to-buy-under-10
- https://goldsilver.com/blog/heres-how-long-it-really-takes-to-recover-from-stock-market-crashes/
- https://www.investors.com/etfs-and-funds/sectors/sp500-avoid-stocks-like-the-plague-when-the-recession-starts/
- https://www.investopedia.com/articles/stocks/07/when_to_sell.asp
- https://www.sofi.com/learn/content/how-many-stocks-should-i-own/
- https://www.marshmma.com/us/insights/details/should-i-reduce-my-401k-contribution-when-the-market-is-down.html
- https://www.morningstar.ca/ca/news/234575/what-happens-if-a-companys-stock-falls-to-zero.aspx
- https://s2analytics.com/blog/the-fifteen-minute-rule-lessons-in-technical-trading/
- https://talkmarkets.com/content/how-much-money-do-i-need-to-invest-to-make-3000-a-month?post=431352
- https://www.investors.com/how-to-invest/investors-corner/how-to-build-long-term-profits-in-stocks-take-many-gains-at-20-25/
- https://www.moneycontrol.com/news/business/personal-finance/owning-too-many-stocks-can-hurt-your-portfolio-returns-7950751.html
- https://www.linkedin.com/pulse/what-happens-precious-metals-during-recession-adam-oneill
- https://www.bogleheads.org/wiki/Percentage_gain_and_loss
- https://stockstotrade.com/3-day-rule-stocks/
- https://www.screener.in/screens/300202/stocks-with-good-1-month-returns/
- https://www.tradingview.com/markets/stocks-usa/market-movers-gainers/