Is there such a thing as recession-proof?
Now that we’re in the midst of recession and approaching 2009 with breakneck speed, there’s no way to draw readers more surely than for investing publications to tout the merits of their “recession-proof” picks.
“Recession-proof stocks: Consumers may be skittish in this weak economy but they haven’t completely closed their wallets. Here’s which companies will benefit,” reads a headline on CNN Money.
“9 Recession Proof Stocks,” promises the Motley Fool to its readers. I’ll admit it – I too have become an investment writer who has thrown about the words “recession proof” to describe a stock I’ve liked this year… but those days have passed.
The truth is (and I’m sorry to say it) that the recession-proof investment is a myth.
What stocks have analysts been bandying about with recession-proof claims? CNN Money’s Paul La Monica talked about Apple (AAPL), Toyota (TM), and – are you ready for this one – Coach (COH) in an April article. Since then, the best performer of the three has been Toyota, only down 36%… not even the browbeaten S&P 500 has fallen so hard.
At the Fool, Joe Magyer took a more conservative approach, talking up the virtues of ampersand-riddled consumer non-cyclicals like Johnson & Johnson (JNJ) and Proctor & Gable (PG). Still, both companies are eating red ink since his article went to print.
What gives? If the best minds in the investment world can’t pick out recession-proof plays, what chance is there for the rest of us?