stock market bloodbath and recession proof investments

Bloodbath – How Did Our “Recession-Proof Investments” Fare Yesterday?

Yesterday’s stock market was an an awful one from opening to close, there’s no two ways about it. What we just saw was the fourth largest single-day point lossstock market bloodbath and recession proof investments in the history of the Dow Jones era.

Days like this are inevitable as the market ebbs and flows over time. They can, however, be particularly painful for anyone with an overexposed equity portfolio. We pay for the big gains tied to a riskier portfolio with occasional big losses.

A month or two back I wrote an article covering a few “recession-proof investments” that tend to perform better when the market is tumbling. I wanted to take a look back at all of our suggestions and see how they performed against the major equity markets yesterday. Let’s have a look!

Low-Volatility Equity

Large investment management firms put together many different blends of equity funds. Certain sectors of industry, certain countries or regions; there’s an index fund for just about everything. One type we pointed out doing relatively well in tough economic times was the iShares USMV fund. This fund holds equities that historically have a low volatility when the economy gets shaky. So, how did USMV perform yesterday?

stock market bloodbath and recession proof investments

That’s far from ideal, as we never want to be in the red. But now compare the -1.77% movement of the USMV to the major stock indices over the day of trading:

stock market bloodbath and recession proof investments

Common index funds, which track the S&P, or the DOW and NASDAQ, do not provide the same safety net as a low-vol fund does. Funds that mirror the major indices are completely exposed on bad days. The percentages speak for themselves.

Government Bonds

Government bonds are also viewed as a safe haven when the equity market is going nuts like we saw yesterday. On a day where the DOW saw a loss of almost 800 points, how did the two government bond funds we suggested perform?

VGSH – The Vanguard Short-Term Treasury ETF    SHM – Barclays Municipal Bond Fund

stock market bloodbath and recession proof investments

stock market bloodbath and recession proof investments

We actually did better with our bond funds today than with our low-volatility equity fund. Today we ended up in the green for both! On a day where almost everyone in the market got crushed, having money in a bond fund is a great way to stabilize the ship. We have a lot more on the basics of bonds here, if anyone would like some further info.


Our trusty precious metal, gold has long been used as a store of intrinsic value in hard economic times. I mentioned in the previous “recession-proof” post how gold rose over 20% during the financial crisis. The equity markets lost 40% of that value over that time period.

We made a couple of recommendations for funds which track the price of gold day to day. This is a great way to get some of your money tied to gold without physically needing to buy, sell, ship and store a bunch of gold bars. That would be nice though! Here’s how the two gold funds we suggested performed in yesterday’s equity massacre:

stock market bloodbath and recession proof investments

stock market bloodbath and recession proof investments

And just to make sure we fully drive this point home, here is a snapshot of today’s market for a comparison against gold:

stock market bloodbath and recession proof investments

Seems like this precious metal can be a reliable safe haven after all, eh?

Playing With Fire

It’s almost inevitable that having skin in the financial game will result in rough days like yesterday. Making sure to stick to a well-rounded portfolio with some risk hedging provides the protection you need for long-term wealth building. Nothing equity-related will keep you in the green when the market loses 800 points, besides picking individual lucky stocks! Lucky for us, as we see in today’s post there are plenty of options out there for hedging this as much as possible.

Hopefully, today is a brighter day for the market. Happy hunting everyone!

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All opinions expressed on this blog are solely those of Home at 30 and are in no way affiliated with any other organization or institution. The purpose of this blog is to give general education and information about investing, wealth, careers, and college; It is not intended to be professional advice.

Author: Joe Savoia

Joe is a 2014 graduate of Northeastern University and currently works in a field sales role for technology company Acquia. He has worked internationally as one of Acquia’s earliest Australia-based employees and helped in the early stages to develop that region. Today Joe is based out of Boston and lives in Somerville, MA. Joe’s primary interests vary widely, including everything from robotics/AI to finance, blockchain, and the rapidly evolving world of tech we live in.

Bloodbath – How Did Our “Recession-Proof Investments” Fare Yesterday? was last modified: December 4th, 2018 by Joe Savoia

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