Core Viewpoint - The stock market is at record highs, but there is a significant chance of a recession in the near future, prompting investors to seek defensive stocks to mitigate potential losses [1][2]. Group 1: Economic Context - There is an approximately 58 percent chance that the U.S. economy will enter a recession within the next 12 months, based on economic forecasts that analyze various interest rates [1]. - Current economic conditions include soaring inflation and interest rates, heightened geopolitical tensions, and upcoming presidential elections, all contributing to market volatility [2]. Group 2: Defensive Stocks - Walmart (WMT): - Walmart is a leading retail operation with a strong presence in the North American grocery market and a growing e-commerce segment [4]. - It was the only stock in the Dow Jones Industrial Average that increased during the 2008 Financial Crisis, as its focus on value attracted consumers facing economic hardships [5]. - WMT stock is currently at all-time highs, benefiting from higher-income consumers seeking savings and improving profit margins as pandemic-related disruptions fade [6]. - Procter & Gamble (PG): - Procter & Gamble is a major player in consumer wellness and cleaning products, with over 20 brands generating at least 80 billion in annual revenues [8][9]. - PG shares had been flat for two years but have recently reached new all-time highs due to strong earnings and an improving outlook, making it a safe haven as the economy cools [10]. - Nestle (NSRGY): - Nestle is one of the largest producers of packaged foods and generates approximately $102 billion in annual revenues [12]. - Although NSRGY stock has been flat over the past five years, it has risen over 900 percent since 1995 and consistently increases its dividend, making it a solid defensive stock for bear markets [14].
Plunge Protection: 3 Stocks to Hold When the Market Dives