FormerOwner, very interesting story about your ancestors. So it sounds like we could all manage just fine in a depression. What did your family do for work? This is the area of concern – how will people derive income?
PD – I asked this question many times, and nobody ever answered it. I remember that U-Haul made more money during recessions, so I checked the public owned storage and moving facilites, and they all have PEs of 28-33. Same for PEs of pawn shops. Other ideas: Gillette, Proctor and Gamble, vice (cigarette, alcohol, gambling, sex – magazines, movies).
Looking back at the 2000-2001 recession is not helpful, because consumers were spending heavily. My neighbors at the time owned an RV dealership, and their business skyrocketed after 9/11. People were flush with cash, interest rates were low, and Americans were more interested in travelling the US in an RV, than flying to Europe. This recession will be consumer-led, so there won’t be that surge in RV sales.
I just try to think about my own life. What would I cut back on if my income were cut in half. Think about people with less money, and what they would do – I read switches from Ralph’s to Costco, Nordstrom to Kohll’s, McDonald’s to eating at home. I wonder if *any* business will do better, only some will be hurt less. I checked into some of the companies I consider recession proof, and the PE ratios are too high. Pawn shops will do really well. People will start selling their luxury cars, jewelry, RVs, boats, motorcycles, dirt bikes, and more. But who will buy it from them?
Sometimes the best think you can do with your money is protect your principal. This is such a time. I put a little money into Chevron based on Zeal’s advice, and want to diversify into other currencies, but I am 95% cash. This is my plan in riding out the recession, just to hold on to what I’ve got.
