Add some recession-proof businesses to your portfolio
The hottest stocks in recent years have been in the technology and communications industries. Many investors found it easy to build a portfolio that skewed toward these growth-focused sectors by buying stocks related to megatrends such as 5G, streaming services, cloud computing, social media, and artificial intelligence (AI).
Unfortunately, these sectors are not immune to a recession. An economic slowdown could cause businesses to reduce capital spending, which might cause them to cut back on expensive upgrades to 5G or cloud computing. Companies also tend to pull back on advertising during recessions, hurting ad-driven sectors such as social media and some streaming services. As previously noted, consumers tend to eliminate extra costs during recessions, which can affect streaming services and other entertainment options.