No Stocks Are Safe Now
Over the past few weeks, we talked about shifting into more defensive positions—European defense stocks, gold miners, wide-moat consumer staples, international value ETFs, quasi-staples, value stocks, and more.
But after last Friday’s market action, we’ve changed our stance. It’s now clear: there is no place to hide in this stock market.
Even the so-called defensive plays we highlighted weren’t spared. They were dragged down by the bearish sentiment—less than the rest, but still down. The market didn’t just slide—it deteriorated rapidly. It was a sudden meltdown. Now, we're staring at what could be a full-blown stock market crash.
Take Berkshire Hathaway. Social media was recently full of praise for Buffett, calling him the G.O.A.T. among billionaires for actually increasing his wealth in this environment.
Then Friday came. Berkshire fell 6.91% in a single day.
If the world’s greatest investor can’t hold the line, who can?
No sector was spared. Defensive sectors like Utilities, Healthcare, and Consumer Staples, traditionally more resilient, all dropped over 4% in a day. This wasn’t rational. It was panic-selling.
Energy stocks were the worst hit, down 9.2%, as recession fears took hold amid rising tariffs. Global trade is expected to slow—less shipping, less production, less energy needed. Goldman Sachs now puts the probability of a U.S. recession at 45%. JPMorgan? 60%.
And this isn’t just a U.S. issue. It’s global.
Major indices in Europe—STOXX, DAX, FTSE 100—fell around 5%. Hong Kong reopened from a holiday and promptly tanked 10% on Monday morning. Japan’s Nikkei 225 was down 6%. Even Singapore’s STI, once seen as a safe haven, dropped 3% on Friday and another 6% on Monday.
This is a global stock rout. Nowhere is safe.
But two hiding places remain—bonds and gold.
1. Bonds
The old rule still holds: when stocks fall, bonds rise. Investors fleeing equities are piling into bonds, pushing up prices and lowering yields. The longer the duration, the more sensitive they are—and the bigger the price surge.
iShares 20+ Year Treasury Bond ETF (TLT) led the pack with a 1.15% gain.
2. Gold
Yes, gold fell 2% on Friday in the initial panic. But it quickly recovered some ground on Monday, with spot gold up 0.32% while stocks kept plunging. As geopolitical uncertainty grows—especially with escalating tariffs and possible retaliations—gold tends to shine as a safe haven.
But this isn’t all doom and gloom for stocks.
Panic creates opportunity.
If you're prepared, you can take advantage of the chaos. There are two strategies you can use:
Tranche Buying: Scale in gradually as the market drops—buy when the index is down 20%, then again at 35%, and once more at 50%. The exact percentages don’t matter as much; what’s important is that you take action and keep buying as prices fall.
Trend Reversal: Wait for the bottom to form, then buy when the stock or index climbs back above the 200-day moving average.
The key is to avoid overexposure and excessive risk. If you’ve managed your downside well, you’ll survive this.
Now it's time to position yourself to thrive in the recovery.