According to Bill Bergman of Morningstar.com, the easiest way to "recession-proof" your portfolio is to buy stocks - lots of 'em:

"OK, if we are in a recession today, what does history tell us about the wisdom of buying stocks during a recession? History says it's time to load up.

If you had put a dollar into the S&P 500 every month since 1950, those 703 dollars would be worth about $9,300 today. But if you had been lucky, smart, and disciplined enough to only invest in each of the nine months that the NBER Business Cycle Dating Committee has deemed as the onset of the nine recessions we've had since 1950--in other words, investing equal chunks of the 703 dollars ($78.11) in each of those nine months--you would have $11,600 today, or 24% more than the amount you would have had by buying into the S&P 500 every month."

In short, "recession investing" has beaten "continuous investing" in either nominal or real terms since 1950. Of course, past performance is no guarantee of future returns, but the numbers are certainly encouraging for anyone thinking of how to approach the U.S. equity markets. The hard part of "recession investing," of course, is actually knowing when a true "recession" has started... If calling a market top is tough, how about calling a market bottom?

NOTE: Please keep in mind that TradeKing does not specifically endorse any of the securities or trading strategies mentioned. Depending on your risk-reward profile, this trade may or may not be suitable for your portfolio. The stocks mentioned are for educational purposes only.

[image: Recession Special]

TradeKing

Please elaborate - is "since 1950, those 703 dollars would be worth about $9,300 today." adjusted for inflation return?

 Marcus,

I might be wrong, I am not a one-handed economist, but it is not quite appropriate to think of "recession" as equivalent of "widely accepted definition of bear market"

Today stock market and companies will be bailed out at our expence,

people - would suffer

The numbers are from Morningstar. I assume they are inflation-adjusted - in the article, Bill Bergman specifically mentions the difference between nominal and real rates of return.

Good point about the difference between "recession" and "bear market." Both are actually technical terms that economists use to describe specific conditions in the economy ("recession") and stock market ("bear market"). People tend to confuse the two, using them interchangeably. One does not necessarily imply the other. 

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