Investment Opportunities in a Recession
David Simon started the investment management firm Twin Capital Management, LLC more than three decades ago and currently serves as CEO/Co-CIO and managing member. David Simon founded Twin Capital Management by leveraging opportunities during 1987’s turbulent stock market and the recession that followed.
Even during times of recession, there are opportunities for savvy investors. Recessions usually precede a change in the economy at large. Analyzing these changes will help investors identify industries that are more susceptible to the effects of a down market. Conversely, recessions are also ideal times to detect viable investments. Under recession conditions, strong companies continue to grow, visibly outperforming their competitors, who must often downsize.
Further, investors should consider investing in producers of consumer staples, products that people consume regardless of the wider economic situation. Such industries include health care and transportation. Lastly, investors should interpret recessions as a time to diversify their investments. A portfolio that is partly invested in international markets is more robust during localized recessions and is able to benefit from growth in other regions of the world.