Recessions – significant downturns in the economy – are common. In fact, they’re so common that historical tracking shows they happen approximately once a decade. Making the right investments is crucial during a recession.
Here are some stocks that should be avoided in a recession market.
Energy and utility stocks are usually great for investors. They provide incredible returns – especially during those periods of rising prices known as “inflation.”
During a recession however, they typically lose around 20% of their value. Stocks in companies like Baker Hughes, Halliburton, and Whiting Petroleum could lose value.
Travel stocks like, Lyft, Uber, Boeing and American Airlines might also lose value. Recessions hit everyday peoples’ wallets hard. People spend less on non-essential things like travel, and more time bargain hunting or enhancing their personal spaces.
Car stocks can be tricky, especially American companies like Ford or luxury ones like Tesla. American-made car companies have always been very tied to the U.S. economy. So when the market goes down, they often do too.
Luxury cars, on the other hand, are expensive – some can cost over $200,000. Most people can’t afford that in a GOOD market, so recessions affect them less.
There is always risk when investing in stocks – they may not provide the kind of returns you want. But during a recession, it’s especially important to be cautious!