New housing prices in China fell 0.8% in September.
It was the country’s first real estate decline in six years, triggered in large part by the Evergrande fiasco. Residential sales, meanwhile, fell 17%.
Given China’s massive role in world trade, its problems could easily spill over into the US economy and trigger something worse than inflation: stagflation.
Stagflation refers to an economy that experiences high inflation, but without the robust economic growth that usually accompanies it.
It’s the perfect storm of bad economic data.
âWe were sort of a supply chain problem away from stagflation,â says economist and Asia expert Stephen Roach in reference to several of China’s economic problems.
But here’s the good news: Even in a period of stagflation, a handful of industries can still make you money.
Let’s take a quick look at three of them. These safe havens could be a smart way to hedge your portfolio with a few digital pennies and dimes.
Utilities tend to have the capacity to withstand any kind of economic shock.
Whether it’s a boom or a slowdown, people will always need to heat their homes in the winter and turn on the lights at night.
The company also has strong barriers to entry.
It is extremely expensive to build the infrastructure necessary to distribute gas, water or electricity. In addition, the industry is highly regulated by the government.
As a result, utility companies generally operate as monopolies or oligopolies in their respective operating regions.
And due to the recurring nature of the business, the industry is known to deliver reliable dividends to shareholders.
The best part? Utility companies like Consolidated Edison, American Water Works and NextEra Energy have increased their dividends year on year.
And these days, you can use spare pennies to access those quarterly income checks.
Technology is a volatile industry, but it also tops the list when it comes to growth, which is what your portfolio needs to fight stagflation.
Even established mega-cap tech companies are showing faster growth rates than most other industries.
For example, Apple reported revenue of $ 81.4 billion for the June quarter, a 36% year-over-year increase. Microsoft earned $ 46.2 billion in revenue, up 21% from the previous year. And Amazon’s revenue jumped 27% year-over-year in the second quarter to $ 113.1 billion.
Of course, these fast growing mega-cap tech games have been in high demand for years.
Amazon, for example, is trading at over $ 3,300 apiece. But you don’t have to buy a whole share of Amazon. Popular investing apps allow you to build a diverse technology portfolio using “equity slices” with as much money as you are willing to spend.
Finally, we have the food industry, which includes grocery stores, food distribution companies, and food producers.
No matter where we are in the business cycle, people always need to eat.
Case in point: While the COVID-19 pandemic posed serious challenges for many businesses, supermarket giant Kroger continued to thrive.
Kroger shares have returned over 20% in the past 12 months.
Then there’s Pepsico, which has 23 brands that each generate over $ 1 billion in estimated annual retail sales. Of course, inflation could drive up costs, but management plans to take “good, big price increases” to counter these pressures.
In the food industry, the higher costs are generally passed on to consumers.
Building a smarter wallet
Investing in this fast-paced world can seem daunting.
Not everyone is ready to put all of their savings on the stock market at record levels.
The good news? You don’t have to invest heavily. In fact, you don’t even have to dip into your savings.
Using the remaining currency from your daily purchases, some apps give you access to expertly designed smart wallets that automatically adjust as your money grows.
Remember: Even if you generate $ 2.50 in spare change per day, that’s $ 900 per year just by doing your regular shopping – and that’s before those spare pennies make money. money in the market.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.