Quote:
Originally Posted by txz4
Think inferior goods, Mcdonalds is inferior to say applebees and chilis etc. Starbucks is ify to me. Walmarts doing well given the fact that its an inferior good and i would expect it to keep doing so as long as market outlook continues to look bearish.
In this market, a sales company that specializes on low price, than its defensive more or less. If your wallet was tight what would you skimp on and when would you settle for a lower quality lower price good over a higher quality higher price?
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Exactly what he's saying here. This is why big-name investors like Warren Buffet bought a huge stake in Wriggley's gum during the recession back in 2008. People may not have the money to go on vacations, but everyone has spare change to buy gum and cheer themselves up.
There are businesses that exist out there which are considered "recession-proof", or "more" recession-resistant than other businesses. McDonalds and Starbucks have, for the past 5 years, grown at over 25% year-over-year. This includes 08 and 09' and the crashes we had in 10' and 11'. Now, mind you that MCD is at it's all time high, and so is Starbucks, so you must also realize that past-performance doesn't equate to future performance. But there are businesses out there like MCD and SB that are still growing because of their business extensions into the overseas markets.
Also, if you're really looking for an area to bet some money on, why not try Oil commodities? I'm not sure if your teacher allows you to play ETF's, but if he does then an Oil ETF might be considered as Iran has just released warships into the Suez Canal today. This is the second time it's done this since the Islamic Revolution of 1979. Oil peaking to $150/barrel anyone? Brent Crude oil for EU is sitting at ~$120/barrel right now, and US Crude Oil sitting at $103/barrel.
Or, better yet, tell your professor that you're keeping your $100,000 in USD cash. Why? Tell him because the Euro doesn't belong at it's current level of 1.30:1 against the USD and it's depreciation will appreciate your 100,000. Not only do you stand a really good chance of seeing the Euro depreciate these next few months, but it's depreciation will protect your USD capital and give you a nice conversion against other currencies. Essentially, you have more buying power now. Sounds like something your other classmates wouldn't think about, right?
Or do as some of the other posters have said and take a nice stake in a stock that gives good dividend incomes so you atleast have a percentage buffer for how much your asset depreciation risk can be nullified. If you want to play ontop of the Oil play, and believe that Oil may go up in the next few months, look into an MLP stock. These are Oil companies in which you purchase a stake in, and since Oil companies are so profitable you enter into a partnership and collect nice dividends. Some of these MLP companies produce around 6% dividend interest with, if you believe Oil is going to soar, a good chance of their stock appreciating these next few months.
Of course, anything could happen and Oil could top-out with the indexes and take a dive these next few months like everything else. Do your research though.
P.S. Not sure why your professor is asking your class to buy-in on Monday. The NYSE is closed for holidays on Monday...