New home prices in China fell 0.8% in September.
It was the country’s first real estate decline in six years, largely triggered by the Evergrande fiasco. In contrast, sales of residential properties fell by 17%.
Given China’s massive role in world trade, its problems could easily spread to 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 comes with it.
It’s the perfect storm of bad economic data.
“We were kind of a supply chain flaw away from stagflation,” says economist and Asia expert Stephen Roach, referring to China’s various economic problems.
But there is good news: even in stagflation, you can still make money on a handful of sectors.
Let’s take a quick look at three of them. These safe havens could be a smart way to secure your portfolio with a few digital nickels and dime.
Utility companies are typically able to withstand any type of economic shock.
Boom or bankruptcy, people have to heat their houses even in winter and turn on the lights at night.
The business also has high barriers to entry.
Building the infrastructure for the distribution of gas, water or electricity is extremely costly. The industry is also heavily regulated by the government.
As a result, utilities typically operate as monopolies or oligopolies in their respective regions of operation.
And because of the recurring nature of the business, the sector is known for providing reliable dividends to shareholders.
The best part? Utilities like Consolidated Edison, American Water Works, and NextEra Energy raise their dividends year after year.
And these days, you can use extra pennies to get access to those quarterly income checks.
Technology is a volatile sector, but it’s also high on the list for growth – something your portfolio needs to fight stagflation.
Even established mega-cap tech companies are growing faster than most other sectors.
For example, Apple reported revenue of $ 81.4 billion in the June quarter, up 36% year over year. Microsoft earned 46.2 billion US dollars in sales, 21% more than in the same period last year. And Amazon’s revenue rose 27% year over year to $ 113.1 billion in the second quarter.
Of course, these fast-growing mega-cap tech games have been in great demand for years.
Amazon, for example, costs over $ 3,300 each. But you don’t have to buy the full share from Amazon. Popular investment apps allow you to build a diversified tech portfolio with “stock slices” with as much money as you want to spend.
Finally, we have the food industry, which includes grocery stores, food distributors, and food manufacturers.
No matter where we are in the economic cycle, people still have to eat.
Case in point: while the COVID-19 pandemic has posed serious challenges for numerous companies, the supermarket giant Kroger continues to flourish.
The Kroger share has fallen more than 20% in the past 12 months.
Then there is Pepsico, which has 23 brands, each with estimated annual retail sales of more than $ 1 billion. Of course, inflation could drive costs up, but management is planning “good, big price hikes” to counter this pressure.
In the food industry, higher costs are usually passed on to consumers.
Build a smarter portfolio
Investing in this rapidly changing world can seem daunting.
Not everyone is ready to invest all of their savings on the stock market at all-time highs.
The good news? You don’t have to go all-in when investing. In fact, you don’t even have to tap into your savings.
By using the leftover money from your daily purchases, some apps give you access to smart portfolios that have been created by experts and automatically adjust as your money grows.
Remember, even if you’re generating $ 2.50 worth of change a day, your regular purchases alone add up to $ 900 a year – and that’s before those spare pennies make any money in the market.
This article is for information only and is not intended as advice. It is provided without any guarantee.