Incoming Recession? Here're a Few Investment Ideas

As 2022 is coming to an end, everyone is preparing for the incoming recession. People have been talking about it for months, and there is one question that arises frequently, especially if you are new to the financial markets: what to invest in during a recession? The truth is that there is no such thing as a recession-proof investment. It all depends on the trading strategy, risk appetite, and goal of each individual investor.

One investor might have a great portfolio with the intention of making sure that it survives the financial hardships ahead. Another investor might be more interested in opportunities that guarantee a fixed income during a declining economy. Others might be interested in buying the dip or finding opportunities in the market’s volatility.

It also depends if the market is experiencing high inflation or if the economy is in a recession. What’s the difference? High inflation occurs when the prices of goods and services start rising uncontrollably. This sends the cost of living through the roof. If this continues for a while, it is likely to lead to a recession. The difference is that during periods of high inflation, governments interfere by raising interest rates. This helps the national currency retain its value and maybe even grow. On the other hand, when a country goes into recession, it means that its national currency is likely to drop in value as its buying power dwindles.

What investment options are popular during recessions?

Some investors, especially those that are building a portfolio, choose a more guarded approach. They typically invest in safe haven assets, such as USD or gold, or defensive stocks. These are stocks of companies or industries that are likely to perform well during economic hardships. They typically include:

• Utilities like gas, water, and electric
• Consumer Staples like personal hygiene and food
• Health Care like pharmaceutical and medical
• Communications like phone and internet

Other investors, especially those that follow Warren Buffet’s school of thought, might think this is a good time to invest in the stock market. When there is less disposable income in circulation, less people are investing in the stock market, driving its price down. Certain investors see this as an opportunity to ‘buy low and sell high’ as they expect the market to recover and flourish again. This trading approach is also mostly suitable for longer-term investments.

Finally, there are those more interested in short-term investments. They trade assets that they expect will fluctuate in value over the next couple of hours, days, or weeks. There are certain moments when the markets tend to see more volatility than usual. This usually happens when there are important economic developments such as employment figures, interest rate alterations, inflation data, and earnings season. Traders see this as an opportunity and position themselves in the market according to what direction they expect the market to move. They are able to do this because trading CFDs allows traders to open both long and short positions in the market. In other words, traders can both buy and sell.

Riding Out the Recession with NAGA

NAGA offers a portfolio of over 1,000 different assets ranging from futures, energy commodities, blue chip stocks, to forex pairs, cryptocurrencies, and many more. Traders can choose to invest in real stocks, or they can trade CFDs going short or long on the markets.

Additionally, NAGA offers an Autocopy function on its social trading platform. This means that traders can scope out the leaderboard, see which Lead Traders match their criteria and risk appetite, and start copy trading their positions. This way, novice traders have the option to rely on the expertise of experienced veteran traders rather than having to start on their own from scratch. But even if they did want to start from scratch, NAGA is better than well-equipped. Our educational resources and tools are second to none.