Banking and Finance

Drawing On 2008: Which Stocks to Buy During a Recession

July 27, 2021

The Great Recession is often cited as the worst economic downturn since the Great Depression in the 1930s. The US Department of Labor reports that during the 2008 recession, 8.7 million jobs were lost and the country’s real GDP decreased by a total of 4.2%.

For those who lived through the Great Recession of 2008 and found themselves as part of the country’s workforce, the 2020 coronavirus pandemic and subsequent economic downturn that is about to follow might bring up less than pleasant memories.

And, unfortunately, market and microdata suggest that the depression that will follow the coronavirus pandemic is going to be even worse than the one we all experienced in 2008. However, it’s not all bad. We can learn from past recessions and depressions in order to figure out how to better maneuver through this one...particularly when it comes to stocks and investing.

What To Know About Stocks & The Great Recession

At the height of the Great Recession, stocks had lost 53.78%. By the end of the financial crisis, they had recuperated about 14% of their value. And, because stock markets go through highs and lows, investment companies and financial advisors all note that the end of the 2008 recession meant that the cycle began again in terms of waiting for another one to occur.

In fact, according to assistant teaching professor of economics at Quinnipiac University, Dr. Zachary Cohle, this was bound to happen around 2021 anyways. Dr. Cohle told Investor Place that “The US was likely to slip into a recession before the first COVID-19 cases appeared within its borders. The disruption in East Asian markets, where many supply lines are integrated, caused one of the biggest markets for exports in the world to suddenly demand fewer consumer goods. The recent reaction to the virus has expedited our slip into recession.”

In terms of a recession in 2020, it’s a good idea, however, to look at how stocks performed and rebounded after the Great Recession of 2008. Overall, the United States government spent $787 billion in deficit spending in order to try and stimulate the economy during the Great Recession. Pumping trillions of dollars into the economy undoubtedly had long-term effects on the stock market, but we’ll get to that later.

How to Invest in Stocks During a Recession

If there’s one thing that investors learned from the previous recession is that the only way to make a lot of money during an economic downturn is to take big risks. This means that, if you’re going to invest in stocks right now, it’s probably best that you do so with the help of an investing firm. 

One finance professional noted that large, cash-rich corporations have had a history of going down the least during financial hardships such as a recession. These kinds of companies can extend to include large corporations such as Johnson & Johnson, Procter & Gamble and even AT&T (note: we’re not suggesting specific stocks to invest in, we’re suggesting industries and referencing specific companies as examples). 

What makes these kinds of companies great for investing in stocks? They tend to have enough capital to last them through a few years of economic hardship. The best investment apps around will help you make sense of these kinds of companies as well as provide you with investment calculator tools to help you assess risks and your financial capabilities in terms of investing at the moment.

Which Stocks Are Performing Well in 2020?

Looking to learn how to invest money ASAP? The stock market is pretty volatile right now, but there are certain companies that are performing well and are slated to continue to perform well throughout April 2020 and beyond. 

You’ll notice that most of the stocks that are performing well currently are from large corporations who either aren’t directly affected by coronavirus or that have thrived in the new day-to-day life that we’ve come to adapt to. Amazon stock is currently down about 1% and Apple stock is down 1.15%.

The U.S. News & World Report ranks Johnson & Johnson as among one of the best blue-chip stocks to buy for 2020. The report noted that JNJ has a 57-year record of raising its dividend, which is likely to continue throughout the next year. The report also noted that online communication platforms are performing well at the moment, including both Slack and Zoom Video Communications. 

Investing in Your Future

If you’re not quite interested in purchasing stocks during a recession but still want to invest in your future, try focusing on optimizing the savings you have in a way that’s less risky. Putting your cash into a high-yield savings account is a great idea if you can afford some of the fees that come along with it.

However, one of the best ways to maximize your saving efforts right now is to use a debit card that comes with bonuses and savings opportunities. Lucky for you, the Cheese debit card does just that.

Our Cheese Debit Card can earn you a lot by cashback and saving bonus. Saving money doesn’t get easier than that. Interested in learning more? Sign up today.

More articles about how to prepare for a recession:

💪How to Prepare for a Recession?

5 Actionable Steps for How to Pay Off Debt During a Recession

Are 401K Investments Safe in a Recession?

How to Protect Credit Health During a Recession?

Tips to Cultivate a Recession-Resistant Investment Plan