Protecting Yourself from Falling Markets: Three Ideas

The global slowdown is looking increasingly likely. This time the latest worries were triggered by Apple’s first revenue warning in 12 years. In turn, investors feared for Chinese growth.

In a deeply interconnected global market, when people worry about China, they are really worried about the rest of the world.

Most major outlets will talk about the fear, the triggers, but not the solutions. These are the things that matter to you and correspondingly, us here at Markets & Money. So what I will be doing here today is providing a few things to keep your eyes peeled for in order to avoid the macroeconomic squeeze that is looming.

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Gold Stocks

This is something Jason Stevenson flagged before the New Year in a great article on the gold opportunity.

Everyone knows gold operates as a safe haven in tough economic times. What a lot of people forget however, is that the companies that mine the stuff can see big jumps as their margins dramatically increase when things go haywire.

Also, as early as October, my colleague Ryan Clarkson-Ledward flagged the potential that gold stocks have on bad days for the market on our sister site, Money Morning.

FYI, you can subscribe to Jason’s Gold Stock Trader here.

Infrastructure Stocks

One thing that we have seen repeatedly over the past, is that when the markets turn for the worse governments love to pump money into infrastructure. It’s Keynesian, and it’s a regressive response to a crisis, but you can still profit from it.

Our publisher, Kris Sayce, has an in depth look at the infrastructure boom in this report.

Think Sydney Airport Holdings Pty Ltd [ASX:SYD], think Transurban Group [ASX:TCL], but there are so many more infrastructure stocks to choose from. Secondary suppliers of concrete and building materials could also stand to benefit when governments choose to pump money into the system.

Exciting small-caps

Small-caps rarely get a look in from big institutional investors and your average lazy punters, but they could form an invaluable part of your portfolio.

When the markets slide, there are always a few bolters.

Think innovation, think biotech and think materials like graphene.

Previously, we have seen companies like Purifloh Ltd [ASX:PO3],  Biotron Ltd [ASX:BIT] and  Resonance Health Ltd [ASX:RHT] take off.

Small-caps require research but the rewards can be sizeable. Sam Volkering, our small-cap expert, has a look how to get into the small-cap sphere from home here.

Taken together, these three ideas could hopefully form the backbone of a response to the prospect of a collapsed market. 2019 only looks bad if you are lost.

Smart investors can find opportunity in any market.

Best of luck in 2019.


Lachlann Tierney,
For Markets & Money

PS: Five popular stocks that could be weighing you down. Download your free report.

Lachlann Tierney is a writer for Markets & Money. He has lived and studied in the US, the UK, and Australia. With an MSc from London School of Economics (LSE) he brings a strong grasp of geopolitics and world affairs to his analysis. Lachlann is always on the lookout for the news that will give you an edge in tomorrow’s markets.

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