Why Your Portfolio Needs Shock Absorbers
Meet Dave and Lisa.
In March 2020, when markets crashed 30%:
- Dave panicked and sold everything at the bottom.
- Lisa held stocks that gained 12% that year.
The difference? Lisa owned recession-proof stocks—companies that thrive when economies struggle.
Today, I’ll teach you how to build a portfolio that acts like Lisa’s. No complex jargon—just actionable strategies.
The 5 Traits of Recession-Proof Stocks
1. Essential Products (The "Toilet Paper Test")
Does the company sell something people need (not want)?
- Examples:
- Groceries (NWC)
- Utilities (water, electricity)
- Healthcare (generic drugs)
2. Strong Cash Flow
Look for:
- Low debt (<30% debt-to-equity ratio)
- Positive free cash flow (FCF) for 5+ years
3. Dividend Aristocrats
- Companies that raised dividends for 10+ years:
- Why? They’re financially disciplined.
One stock in our portfolio has paid dividends since 1995. Subscribe.
4. Global Operations
- Geographic diversification = stability.
- Example: A Canadian grocery chain (NWC) profits in remote regions and cities.
5. Low Beta (<0.7)
- Beta measures volatility vs. the market.
- Low beta = Less swing during crashes.
3 Hidden Gems in "Boring" Industries
1. The "Pipes" of the Economy
- Companies that distribute essentials (not glamorous but profitable).
- Teaser: We’re tracking an industrial supplier up 120% since 2022.
2. Government Contractors
- Steady revenue from public projects (roads, defense).
- Red flag: Watch for political risk.
3. Discount Retailers
- Walmart thrived in 2008. Who’s next?
- Data point: Discount stores see 15% more traffic during recessions.
How to Build Your Fortress Portfolio
Step 1: Allocate 20-30% to Defensive Stocks
- Balance with growth picks.
Step 2: Buy in Phases
- Use dollar-cost averaging (DCA) to avoid bad timing.
Step 3: Reinvest Dividends
- Compounding turns small yields into big gains.
One Starter Stock:
- The North West Company (NWC)
- Why? Monopoly-like grip on remote groceries.
- 3.5% dividend + recession-resistant.
Recessions are inevitable—but losses aren’t. Start with these principles, and you’ll be the calmest investor in the next downturn.
Want our current top 3 recession-proof picks? Includes:
- A utility stock with 6% dividend
- An overlooked distributor
- One "boring" stock poised for 50% growth
