Stock Portfolio for the Recession - Tips from the Financial Expert to Prepare for the Downturn.

Stock Portfolio for the Recession - Tips from the Financial Expert to Prepare for the Downturn.

According to a report by de.investing.com, European markets are in the red at the start of the week, following the trend of instability in stock markets worldwide. One of the most debated questions in the market is whether the policies of major central banks in developed countries to curb inflation will lead to a recession, as is already the case in some countries. Capital Group provides a chart that examines how investors should position their stock portfolios for a recession.

The chart shows that some sectors have performed better than the overall market during downturns. In particular, sectors with higher dividend yields, such as consumer staples and utilities, have performed better. Companies with strong balance sheets, stable cash flows and large growth margins are recommended as preferred investments in times of economic stress. Likewise, investors should look for companies that offer products and services that will be in high demand even in a recession, such as telecommunications and utility companies and food manufacturers with pricing power.

Attempting to anticipate market behavior by selling positions is not recommended by Capital Group. Instead, investors should take the opportunity to review their asset allocation and ensure their portfolio is balanced and well-diversified.

Overall, the analysis suggests that investors should focus on more defensive sectors with stable returns during a recession rather than panic selling positions. Companies with solid financial metrics could offer better long-term performance, even during times of economic turmoil.